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Variable Annuities: Fifth Third Securities Fined By FINRA For VA Sales


An article by Reuters’ Jonathan Stempel further emphasizes the importance of responsibility when selling variable annuities. The Financial Industry Regulatory Authority (FINRA) has fined Fifth Third Securities about $2 million (including $250,000 in restitution) for unsuitable sales of variable annuity products to the elderly, whom are least likely to benefit from them–their long surrender periods, expensive fees, and swings in value make them less than ideal for retirement.

However, FINRA claims that 42 Fifth Third brokers sold or exchanged over 250 identical variable annuity policies between 2004-2006, without consideration of each individual’s circumstances and investment goals. Such a strategy is unlikely to end well for many investors. On a positive note, while Fifth Third has not admitted wrongdoing, it has agreed to hire a consultant to reform its training and supervision practices so something similar never reoccurs.

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