July 2, 2008
The only people who will get benefit by this proposed rule is the brokerage firms. The public will get hurt because:
1. The supply of product of this type will shrink.
2. The cost of providing this product will increase thereby
increasing the penalties for early withdrawal and/or reducing the benefits to the consumer.
3. The increased regulatory costs must be paid by someone.
4. The unscrupulous agents selling these products will now get to hide behind a thick prospectus, which the average investor cannot understand and therefore won't read. And those unscrupulous agents will still be unscrupulous, and you'll never catch them until they have done their damage.
All law making/Rule making agencies have a tendency to punish EVERYONE for the few who are unscrupulous. You have plenty of laws/rules on the books to take out those few. Why don't you focus on them and leave the good agents alone.
If you want to be proactive, require a comprehensive exam to be passed by agents to renew their license. My experience shows me that MOST agents do not understand what they are selling. A truly comprehensive test would force them to truly learn the values of the product, who is a good prospect to purchase etc. We don't need more rules and regs. We need morally responsible people helping people who desperately need good advise. Unfortunately, GREED is a problem in our society, but don't punish the public and those who are responsible. Punish the offenders harshly
That will put them out of business and hurt them where it counts, their pocketbook.
A final thought. Over regulation becomes NON-REGULATION. Example- the typical mutual fund prospectus. How many people actually read them, let alone understand them.