
By Oyster Consulting LLC
Subscribe to our original industry insightsVariable annuities offer a number of complex features and options, which can be confusing for both investors and the financial professionals who offer them for sale. Among those features and options are fees, expenses and other charges that can vary depending upon how the product is designed. Examples include:
In many cases, if the same variable annuity product is offered using different share classes (e.g., B-Shares, C-Shares and L-Shares), the charges described above will differ.
FINRA rules require that in order for these annuities to be recommended, financial professionals must have a reasonable basis to believe that the customer would benefit from certain features, such as tax deferral, a death benefit or a living benefit. They must also reasonably believe that a customer has been informed of the various product features, including various fees and costs, investment risks and potential tax penalties.
To help ensure that recommendations of variable annuity products are suitable, your firm should do the following:
Oyster Consulting has the knowledge and experience to help you establish effective processes and documentation for making suitability determinations, establish effective written supervisory policies and procedures, and provide training for your personnel. If you have any questions regarding this topic or would like to discuss receiving some assistance in this area, give us a call and we will put you in touch with our experts.
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