In the wake of regulator scrutiny, Voya Financial Advisors is once again placing restrictions on its sale of variable annuities. The regulators are wondering whether the products are appropriate for investors who are saving for retirement. Variable annuities have been getting a lot attention from regulators from FINRA, the U.S Securities and Exchange Commission, and the Labor Department, which oversees retirement benefit plans that provide tax benefits and are sponsored by employers.
InvestmentNews reports that according to internal documents, Voya said that it would no longer approve the sale of C share variable annuity contracts if the contract has add-ons that cost extra. It was just last month that the firm placed the same restriction on variable annuity contracts involving L shares.
Zoya brokers will now have to provide clients with an analysis, prepared by Morningstar Inc., of each annuity contract’s cost in dollars. They also will have to get a client’s signature before selling the new annuity.
InvestmentNews reports that in an unsigned compliance document dated July 27, 2015, Voya said that the Financial Industry Regulatory Authority has been looking at whether investors are understanding the various expenses and costs involved with different share classes. The regulator also wants to determine whether L-shares are appropriate for the investors buying them.
L shares and C shares typically give investors the opportunity to withdraw premium payments or exchange their contracts either right away or sooner than they would be able to otherwise without having to pay a surrender charge. With C shares, there is usually no surrender period when an investor would have to pay for the withdrawal.
However, variable annuity C-shares typically come with more costly ongoing fees to make a lack of a surrender period possible. Also, with these types of contracts, brokerage firms and affiliated financial advisers benefit from a robust compensation stream.
Our variable annuity fraud lawyers are here to help investors of securities fraud recoup their losses. We work with investors of all ages, retail investors, institutional investors, and high net worth individual investors. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
Under regulatory pressure, Voya restricts sales of more variable annuities, Investment News, July 29, 2015
Variable Annuities: What You Should Know, SEC
Royal Alliance Must Pay $1.4M To Retirees for Nontraded REIT, Variable Annuities Sales, Stockbroker Fraud Blog, July 21, 2015