Because variable annuities and equity indexed annuities are considered securities, financial representatives must be registered with the Financial Industry Regulatory Authority (FINRA) to sell these products. On the state level, variable annuities are considered an insurance product; therefore they must be registered with the California Department of Insurance.

FINRA has been critical of variable annuities, maintaining that there is inadequate training and supervision of variable annuity sales by financial services companies. According to FINRA, this results in financial representatives doing a poor job of assessing suitability for products and riders. The concern is heightened, because a disproportionate number of annuity sales are made to the elderly, who FINRA considers easy prey for unscrupulous sales people.

In fact, the high fees, surrender charges and market risk associated with variable annuities make them poor investment choices for older investors. Under California law, any attempted annuity replacement for an investor 65 years or older is considered unnecessary unless the selling agent establishes that the replacement conferred a "substantial benefit" to the customer.

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