An annuity is a form of insurance that offers a series of payments for a period of time. The traditional annuities are either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment. Sales commissions to brokers can go as high as 12%, and surrender charges can go as high as 18%.
FINRA requires all of its members to conduct due diligence of all securities and investment products before offering and selling them to their clients. When a brokerage firm’s representatives skirt around the rules and offer securities that have not been approved, those individuals engage in a violation known as “selling away.” This practice is the product of a brokerage firm’s failure to enact and enforce supervisory procedures, and it can form the basis for liability.
Have you suffered losses in your investment account due to your stockbroker’s misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for unsuitable recommendations, misrepresentations, and/or sales of unapproved investment products.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.