Subject: File No. S7-14-08
From: C W
Affiliation: A.G. Edwards Sons, Inc. (1887-2007) aka Wachovia Securities, LLC

September 9, 2008

I just received some junk mail touting a "10% bonus annuity, with a free $25 gas card and a 9.5% commission"

I have been with A.G. Edwards since 1999. I am on a team with about $300 million client assets. Our team is very successful and most of our new business is from referrals. Our clients are very satisfied with individual stocks, bonds, ETFs, and certain mutual funds. I am very familiar with ALL aspects of annuities and have chosen NOT to sell them to clients, in keeping clients best interests in mind. I have a Life/LTC license: CA #0D.

Lately we have had many client inquiries regarding index annuities, especially from older/elderly clients. Most people do not understand the terms and fine print in an annuity contract, especially the crediting methods used in index annuities. In addition to this, many of the individuals selling these annuities have little or no experience in securities, indices, estate planning, taxes, etc. Life and PC insurance salespeople with little or no background in securities or investments sell a large number of annuities.

I strongly believe that this rule will benefit the individuals that are so often talked into buying these products. Last week a client called from Florida asking about index annuities. He informed me that there are free lunch meetings offered at least a few times a week to senior citizens only. These people often wind up buying an index annuity that is NOT in their own best interests.

The problems with this product include:

-Very high commissions (9.5% on the one I saw today)
-Very high internal fees.
-Difficult to understand, misleading, and very complicated crediting methods.
-Long time periods with no access to money without CDSC penalties, except for the low annual free withdrawal amounts.
-Untrained and inexperienced people selling contracts.
-Misleading sales literature.
-Target market is elderly, uninformed, non-sophisticated investors.

These products are DEFINITELY SECURITIES, as your investment return DEPENDS TOTALLY ON THE PERFORMANCE OF AN INDEX CONSISTING OF SECURITIES

How many more people have to buy something that is:

-Illiquid
-Difficult to understand.
-Adverse tax consequences (taxes may not be lower in later years)
-Very high fees/commissions
-contract gains are often capped and/or limited no matter how high an index goes.
-Guaranteed by the solvency (or lack thereof) of the insurance company.

This rule will help, but it is absolutely necessary that you strive to eliminate the abuses that occur so often in this industry. I am tired of seeing so many people get conned in to buying these so-called safe or guaranteed investments. I hope you will take note that most of the comments against this rule come from the insurance salespeople who do not have a securities license, or experience with investments.

We have a fiduciary responsibility no matter what type of product or investment is made on behalf of clients. We choose investments only after considering a clients age, taxes, income, risk tolerance, estate plans, asset allocation and many other items. Index annuities cast a bad light on financial professionals and the industry as a whole. Annuities are often sold just for the commissions, without any regard for the many important aspects of financial planning.

Respectfully,

Mr. C
CA Insurance Lic. #0
Series 7 63
A.G. Edwards Sons, Inc. (1887-2007) AKA Wachovia Securities, LLC