Although variable annuities have improved in recent years, their gimmicky features and hefty, hard-to-decipher fees have long made them a punching bag for many professional investors--and it's not clear that advisors who had to act solely in their clients' best interest would continue to use them.
Consumer advocates and industry analysts don't necessarily deny stricter standards for financial advisors might hurt insurance industry profits. The problem, they argue, is that most consumers don't understand the difference between financial advisors who dispense advice and insurance brokers who mainly sell products. As a result, few potential customers can tell which recommendations reflect their best possible interest and which are part of a sales pitch.
The government needs to close "a regulatory loophole that has led to substantial investor confusion and abuse," said Knut Rostad, founder of the Committee for the Fiduciary Standard.
Copyright (c) 2010, Dow Jones. For more information about Dow Jones' services for advisors, please click here.