September 8, 2008
Dear SEC -
It is frustrating and confusing to me why recent attention regarding fixed index annuities has become so popular. I assume it's because a large number of the 600,000 brokers in the country are feeling the pressures of trying to keep up with a product that is actually protecting the public's assets instead of throwing their savings into a "diversified" portfolio. Can you really compare the blatant atrocities that have taken place in the securities world to a handful of individuals who were sold FIA's by unscrupulous agent's. Just because risk is available for purchase and many retirees are sold it, does it make it OK when they lose 20-30% of their portfolio at 70 or 80? Safety, safety, safety it's what works and it's what many hard-working middleclass Americans need. Let Wall Street keep their hedge funds, but don't send the average Joe to the broker and expect him to be sold an FIA because that's the only place where they can be purchased - we all know how that's going to work out. The majority of mutual funds don't keep up with the S&P 500, but many investors are still sold alternatives in hopes of outperforming it - but do they? Is active management really an appropriate technique for blue-collar workers or someone retiring with limited funds? In today's economy many would consider a $500,000 IRA limited funds. If you're 65 and that's your retirement package you need every single cent. It is a hoax to assume risk is what the vast majority need when they retire. But overconfident brokers some how find ways to keep people digging out of a hole. Why is this, is it greed, wishful thinking? FIA's protect savings and enables investors the ability to bypass the typical trip to the broker to buy it. Why are we wanting to give brokers everything, are they not satisfied with the trillions of dollars they already have access to. Keep safety separate from the realms of risk and please let the traditional insurance agent continue to have a place in the financial world. As John Bogle said " if you cant' afford to lose 20% you shouldn't be in the stock market" and many people can't.
- Ian Sample