Subject: File No. S7-14-08
From: Robert E Woods, CAS,CSA
Affiliation: Pres. Woods Financial, Inc.

October 14, 2008

Email: bob@woodsfinancial.hrcoxmail.com
Comments:

I am a 34 year veteran of the insurance industry. I have been selling the safety of fixed annuities to my clients for ALL of that time. I have studied for and obtained my Certified Annuity Specialist CAS designation and am totally aware of the differences between fixed, fixed index and variable annuities.
About 10 years ago I decided to target the retiring baby boom generation of which I am a member and offer ways to keep their retirement nest eggs safe from market volatility and the effects of inflation and taxes. The reason I am able provide those services is because of the fixed index annuity contract with it's inherent guarantees and earning potential. I even went so far as to relenquish my Series 6 license because the two broker dealers I had affiliated with refused to recognize these contracts for what they were and threatened punitive action against me if I sold them. Their position was the index contracts were not under their supervision (read they didn't get paid for me marketing them) and I was forbidden to even talk about them. There were also many blurbs and letters from the compliance departments as to the products non viability in our market place which were designed to convince me that continuing to sell the BD's mutual funds and variable annuity products for which they did get paid was the only viable way to approach clients,... hang in there the markets will come back... even though many were losing money regularly.
But now that many of these same BD's are collecting revenue from their brokers' sales of these products they are just fine to market. Come On The writing is on the wall.
The retiring boomers want safety and greater earning potential without fear of market losses which is evidenced by the billions of dollars flowing into index contracts... much of it out of the brokerake accounts that have been losing clients money for years. So it's become painfully clear to anyone who can follow the bouncing ball ($)... the brokerage industry is now fine with these contracts as long as they are getting paid. And the way they are trying to accomplish this is to get control of the product by a coercive effort to have it declared something any insurance agent who ever sold or read a policy knows...this is not a security, this is a fixed, guaranteed,annuity which is defined, controlled and regulated by the insurance industry and has been from day one. By deceptively bringing senior issues and fear into the mix to make it's point, the SEC and FINRA are trying to take control of a product they have no business being involved with. Even the IRS sees life insurance and annuities in the same context.
One of the the ironies here, in my mind , is how can an organization, the SEC, who in the past two decades (and more recently the past 2 months) has failed to supervise it's own entities and has been under intense scrutiny for miltiple investigations and lawsuits against it's own variable annuities deceptive sales practices, mutual fund companies caught doing after hours and insider trading, major wire houses caught offering brokers special incentives to push inappropriate proprietary products to consumers,illegal accounting practices and fraudulant and deceptive sales practices for mutual funds... have the temerity to ,under the guise of protecting consumers, want to " supervise " the sale of an insurance product. They don't really want to supervise the contracts...but in doing so they would get in on the dollars and cents aspects of what has proven over the last few years to be an extremely successful product to the consumer. And how would that be done? By having it declared a security which would mandate it's inclusion under the BD's and of course, then be subject to the BD's collection of an override.
There are too many weak and invalid points the SEC has tried to foist on the public re: these contracts. It's evident it's all about the money for the BD's and these insurance contracts don't need another layer of what is already a boatload of regulations that have been protecting the buying public more than adequately for decades. The insurance industry has some of the most extensive and comprehensive regs in place re these products and have been doing a great job enforcing the existing rules.
Stay out of business that's not under your jusisdiction, SEC. Stop the fear campaigns and get off the moral high horse of " protecting the vulnerable frail feeble senior." You are talking to me and my generation and we are none of the above...and we know a solid, stable product when we see it presented properly. All that you are doing is complicating the process of protecting assets for our retirements with the same old tired arguments. And all for the money. It's so obvious. The SEC, FINRA,and the entire brokerage industry should be ashamed of itself.

Robert E Woods ,CAS

PS The true value of these contracts is on display today in the midst of this meltdown of our markets. None of my Fixed index annuity clients has seen one dime of erosion in their accounts. Can any variable annuity,mutual fund or brokerage account mgr. make that statement?
A viable product that works as advertised and already has extensive oversight from a respected and venerable industry. Why , (other than the money,) would someone want to screw that up? We'll hang our own bad guys when we find them...we always have. It's not your jurisdiction. Better you should concentrate on your own bad guys...I think it should be easy to identify a them...they would be the ones in charge of protecting investors from greedy fraudulant transactions and then accepting bailout money from the same folks they were supposed to be protecting.