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Variable Annuities and FINRA Rule 2330

Topic

Retirement Savings and Income Planning

Program ID

275124

Hours

1

Format

Self-Study / Traditional course (50+minutes)

Complexity

Intermediate

Description

The variable annuity (VA) as a financial product generates both praise and criticism. Proponents focus on its investment options, tax-deferred status, and accumulation properties; detractors point to its costs and complexity. Ultimately, for some customers in some situations, the VA is an ideal investment and financial vehicle; for others, it is not appropriate. FINRA adopted Rule 2330 to better ensure that RRs recommend and sell VAs only to those customers for whom they are suitable. The rule also requires that member firms develop training designed to ensure that RRs who effect (and principals who review) VA transactions comply with the rule. This course is intended to provide that training. This course covers the material features of variable annuities identified by FINRA, including the investment and the insurance components; the two suitability tests for customers under Rule 2330; exchanges; time horizon and liquidity needs; guarantees and riders; surrender periods and charges; early withdrawals; mortality and expense risk charges; VA innovations; and how Regulation Best Interest affects VA recommendations.

Learning Objectives

The variable annuity (VA) as a financial product generates both praise and criticism. Proponents focus on its investment options, tax-deferred status, and accumulation properties; detractors point to its costs and complexity. Ultimately, for some customers in some situations, the VA is an ideal investment and financial vehicle; for others, it is not appropriate. FINRA adopted Rule 2330 to better ensure that RRs recommend and sell VAs only to those customers for whom they are suitable. The rule also requires that member firms develop training designed to ensure that RRs who effect (and principals who review) VA transactions comply with the rule. This course is intended to provide that training. This course covers the material features of variable annuities identified by FINRA, including the investment and the insurance components; the two suitability tests for customers under Rule 2330; exchanges; time horizon and liquidity needs; guarantees and riders; surrender periods and charges; early withdrawals; mortality and expense risk charges; VA innovations; and how Regulation Best Interest affects VA recommendations.