STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

Several weeks ago, Bob Eder's blog discussed RILAS or Registered Index Linked Annuities. In this blog Bob discusses the major penalties and charges that can reduce a client's return. These penalties include, but are not limited to, surrender charges; interim value adjustments and mid-term investment withdrawals; and tax penalties. This information is based on a publication of the SEC's Office of the Investor Advocate entitled "Report on Activities Fiscal Year 2023." A "RILA" has both insurance components and investment components. An investor puts money into a RILA, generally with a minimum requirement of $10,000 to $20,000.  After making this initial investment, the RILA purchaser then decides how much premium to put into investment options. These investments are relatively short-term, generally not exceeding six years.  This short-term character of RILA investments means that the investment options generally will not exceed the life of the RILA contrac...

FINRA's Content Outline for the Securities Industry Essentials (SIE) Exam lists Annuities under Section 2.1.4, meaning that the SIE Exam covers these packaged product investments and asks questions about them. A few days ago, on the SEC website, I saw that the SEC is paying close attention to the complex structure and details of a particular type of annuity, named Registered Index-Linked Annuity (RILA), in its   SEC OIAD Report on Activities—Fiscal Year 2023 . Here is just one paragraph from this SEC publication in regard to RILA's. I intend to present more segments in future blogs from this SEC Report on RILA's. " REGISTERED INDEX-LINKED ANNUITIES (RILAs)  "What Are RILA's and How Do They Work?  "RILA's are tax-deferred retirement savings vehicles that advertise potentially reduced market risk relative to investing directly in financial markets. Like many other retirement savings vehicles, money is first added to the overall vehicle and then the inve...