Annuity war of words
November 9, 2010 by Darla Mercado
By Darla Mercado
November 7, 2010
Indexed-annuities expert Sheryl J. Moore is back, and she has a challenge for the media: Stop referring to indexed annuities as “equity-indexed annuities.”
Ms. Moore, president and chief executive of AnnuitySpecs.com, is seeking 200,000 signatures for her Condemn the Word “Equity” petition, aiming to ban the use of the term “equity-indexed annuities.”
The campaign is the result of a tiff she had with financial adviser and columnist Allan S. Roth last month after he wrote a series of articles mentioning the products. Ms. Moore argued that “equity-indexed annuity” is out of vogue; Mr. Roth pointed out that the Securities and Exchange Commission uses the term.
Ms. Moore said that she hopes that dropping the term “equity” when referring to indexed annuities will help correct the misconception that the products are supposed to achieve returns that are as high as those of equity-based products.
The growth of an indexed annuity is linked to an equity index, but how much it grows depends on participation rates — how much of the market’s gain the annuity can capture — and interest rate caps or limits on the return, among other factors.
Ms. Moore said that she could obtain at least 200,000 signatures of people in the indexed-annuity arena, including company executives, testifying that the term is no longer in use.
Mr. Roth said that if Ms. Moore can get that number of signatures by Dec. 31, he will stop using the word “equity” when discussing the products.
“I take these articles very personally. We e-mail each other every other week, and he doesn’t believe the things I say about indexed annuities,” Ms. Moore said.
“I understand [that she] wants every customer to be aware of these complex crediting schemes, but I have yet to meet a client that understood them,” said Mr. Roth, founder of Wealth Logic LLC, a registered investment advisory firm.
