Securities Broker Jealousy Fuels Attacks on Annuities: Ohio Lawmaker

Ohio state Sen. Bob Hackett (Photo: Ohio Senate)

A key state insurance legislator has suggested that big broker dealers may be partly to blame for some of the hostility aimed at variable annuities in recent years.

Ohio state Sen. Bob Hackett, R-London, Ohio, talked about that possibility in March, in Nashville, Tennessee, at a meeting of the National Council of Insurance Legislators' Life Insurance & Financial Planning Committee.

NCOIL put a summary of Hackett's remarks in a packet of materials for NCOIL's next in-person meeting, which is set to start June 10, in Newport Beach, California.

Hackett is a life insurance agent. From 1983 through 1990, he was affiliated with units of Prudential Financial Inc. He now works as an advisor at Central Ohio Financial Management Group LLC.

At the Ohio state Senate, Hackett is chairman of the state Senate Insurance and Financial Institutions Committee.

At the Life & Financial Planning Committee session in March, Hackett described the annuity sales standards barrage as "somewhat of a fight between… all of the big broker-dealers vs. the insurance industry, as variable annuities are being targeted," according to the draft minutes

Hackett said broker-dealers want everything moved out of variable annuities, and into brokerage accounts, because every transaction that occurs in a brokerage account generates a transaction fee, according to the draft minutes.

"Broker-dealers were jealous of the money the insurance industry was making, but, over the long haul, it was still cheaper than broker-dealers' methods," Hackett said, according to the draft minutes.

South Carolina Insurance Commissioner Ray Farmer was also at the NCOIL life session.

Farmer agreed with Hackett and said that the NAIC "sees the conflict between broker-dealers and the agent community, and the goal is to put the customer first," according to the draft minutes.