Annuity Suitability
The producer's duty to have reasonable grounds for believing an annuity recommendation suits the customer's age, objectives, time horizon, and finances, documented and retained.
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Practice This Concept
Before recommending an annuity, a California producer must evaluate suitability information about the consumer. Under the annuity suitability standards of CIC Section 10509.913, all of the following are factors the producer must consider when determining whether a recommendation is suitable EXCEPT:
The producer's commission rate and standing in the insurer's sales contest — California's annuity suitability standards require the recommendation to be based on the consumer's own circumstances - age, income, financial experience, objectives, time horizon, and risk tolerance - never on the producer's compensation. A producer who recommends an annuity because it pays a high commission or wins a sales contest is placing personal gain ahead of the client's needs, which is exactly what the suitability rules and the ethical duty to put the client's interest first are designed to prevent.
CA-specific example
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