Would you take this trade? will this pass the mustard with FINRA?
Client has a year left on his annuity to come out of surrender, and he has an m&e of 1.55% per year. The surrender charge is less than the m&e charge (don't know how this is possible, but that's what the carrier says). Client is a senior and not articulate. He is timid with the markets, but he wants to invest to make money. In 2008 he pulled a sizable amount of cash from his bank, because he was afraid of the banks folding. He wants to get back in. He doesn't need income, so a withdrawal or income rider is not suitable for the current contract. The choice is either to put him into a fixed account within his current contract which will earn 3% or to move him to another product like an index annuity which has buffers and caps to control losses yet give him a modest but better return. 25% of his assets were placed on a fixed fund within his va. Current contract I am considering consists of 45% of his liquid assets.
Will FINRA question the surrender charge even though the M&E charge is higher? new contract has no M&E, only buffers and caps.