Research / Research Papers

An Economic Analysis of Equity-Indexed Annuities

2008-09-11

At the request of the North American Securities Administrators Association, Dr. McCann authored a White Paper on equity-indexed annuities in support of the SEC's proposal to provide federal investor protections to purchasers of equity-indexed annuities. Dr. McCann concluded that:
- Existing equity-indexed annuities are too complex for investors to understand.
- This complexity is designed to allow the true costs to be hidden.
- The high hidden costs in equity-indexed annuities are sufficient to pay extraordinary commissions to a sales force that is not disciplined by sales practice abuse deterrents found in the market for regulated securities.
- Unsophisticated investors will continue to be victimized by issuers of equity indexed annuities until truthful disclosure and the absence of sales practice abuses is assured.

By Craig McCann

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Craig J. McCann
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