During the Senate Banking Committee hearing on April 28th, Senator Elizabeth Warren (D-MA) raised concerns about the incentives and "kickbacks" that annuity companies offer to brokers and dealers that sell the annuity products.
She talked about the she wrote a letter to the 15 largest annuity providers in which she states that "annuity providers offer a vast range of perks - from cruises to international travel to iPads to diamond-encrusted ‘NFL Super Bowl Style' rings to cash and stock options - to entice sales of their products."
The letter continues, "I am concerned that these incentives present a conflict of interest for agents and financial advisers that could result in these agents providing inadequate advice about annuities to investors and selling products that may not meet the retirement investment needs of their buyers."
One of her main concerns is the targeting of seniors and those close to retirement "because they have little time or ability to recover potential losses from bad investments."
Sen. Warren also expressed need for a "strong conflict-of-interest rule from the U.S. Department of Labor (DOL) to protect retirees by requiring advisers to act in their clients' best interests" and praised the Florida law that protects seniors by mandating that sales persons explain why they recommend one product over another.
Read the letter from Sen. Warren. Watch a video of Sen. Warren at the hearing.