According to the FINRA BrokerCheck Report on Malcolm J. Berko (Report #455575-38307),available at www.brokercheck.finra.org, numerous clients, over the period of 2001 – 2009 made formal complaints to FINRA, alleging everything from unsuitable investments to fraud to breach of fiduciary duty. Upon investigation of these complaints, on July 13, 2009 FINRA barred Mr. Berko permanently from the securities industry. Although he can no longer act as a principal or investment adviser, Mr. Berko continues to write his syndicated column, “Taking Stock.” Given his history, perhaps his opinion is not worth commenting on; however, since some people do read the column and perhaps, sadly, rely on information it contains, NAFA, the National Association for Fixed Annuities, will clear up a few items contained in his April 28, 2013 Taking Stock column.
“[The CEO's] professional Qualifications are reflective of his mendacity”…
Mr. Berko engages in a shocking level of name calling among other specious and overwrought characterizations. This is particularly rich, given Mr. Berko’s lifetime ban from any FINRA activity! But, to the point about professional qualifications, a person, in order to sell a fixed annuity, must be licensed in the state where the sale is made. You may also hold other financial services licenses but YOU MUST hold an insurance license. As such, you are subject to strict marketing, advertising, and disclosure laws and must always put your client’s interest first by making a suitable recommendation that is based on their financial situation, risk tolerance, and access to funds for emergencies — or just plain fun.
“[The] CEO is one of these things…”
The “CEO” that called upon “BT” in Bethlehem, PA lives just 18 miles up the road from “BT” in Center Valley is indeed many things. He is a small businessman pays taxes and provides jobs. In a small rural town of about 8300 people, those jobs are pretty important if you want to work close to home and family. And at the end of each day, like most annuity salespeople, he goes home to a house he owns and a family his business helps to keep clothed and fed.
“The volume of complaints [is] beyond the SEC’s ability to respond…”
Really? Where did Mr. Berko get this information? It is not on the SEC online complaint data report nor could we find it in the SEC “WhistleBlower” Sanctions Database. The NAIC tracks complaints filed by state insurance departments and insurance companies (who are required by law to track and report customer complaints) and the complaints are identified by product and complaint type (e.g., service issues versus sales practices). The NAIC data tells us that fixed indexed annuities are one of the highest in consumer satisfaction with far fewer complaints than financial products sold under FINRA or the SEC jurisdiction.
“There is no [fixed] indexed annuity guaranteed not to lose money…”
Wrong! All indexed annuities guarantee you can’t lose money when the index does. Indexed annuities are fixed annuities that simply can earn additional interest based on changes in a market index. If the index is down the insurance company pays ZERO interest into the annuity, but it does not lose money – this is guaranteed.
NAFA, the National Association for Fixed Annuities, has one simple mission – to promote better awareness and understanding of fixed annuities. One would hope financial reporters shared this mission. Fixed annuities are not for everyone, nor should they necessarily represent your entire savings plan. But in order to determine if a fixed annuity is right for you, you need to know the facts about them – their benefits and limitations. Please visit www.fixedannuityfacts.org for more information.