Subject: S7-14-08

October 29, 2008

Years ago, I held my securities licenses and sold securities products to my clients, mostly age 50 and above. My thinking was that this was the only way to invest their money, putting it at risk in order to receive rewards for their investments long term. When obtaining my securities licenses, I couldn't help but realize that the stock market was a huge monopoly game, and that if one didn't really understand the rules, they really shouldn't play the game. Up ticks, selling short, call options and the like. Mutual funds seemed the best route. But then, I noticed the many fund charges and management fees associated with routine investment packages. I can tell you now, that although a law requires a prospectus be given to the client, 99.99% of the time, they don't read it, nor does the agent. In fact, 99.99% of the time, the agent doesn't even point out all the fund charges the client will be charged. Maybe this could be the next Dateline assignment. Nor, are these charges reflected in statements clients receive on their investments quarterly, which in my opinion, should be. The only thing a client see is an annual charge of mostly $35 per year. This is so misleading the public. The NAV is calculated daily and these charges are automatically taken out and what the client sees in the end is a value that they have no idea has commission charges taken out, 12b-1 charges, management fees, etc. Statements should reflect what trail commissions are being taken out on investments so that clients know what their broker is making off them every quarter.

Indexed annuities are simple, safe investments for folks in the age bracket where they are either getting ready to retire or in retirement. Susie OrmNeither should have their money tied to risk. Unlike variable annuities, IAs are not directly invested in the legalized gambling, secondary markets. They are only invested in a concept of indexed linked investments. Their money is not at risk. And it is guaranteed. Again, very simple. The risk is with the insurance company and not the client, unlike variable annuities. Risk is extremely important to consider when dealing with someone's life savings.

When there is a loss of someone's retirement fund in the market, then someone else made a gain. The money just did not vaporize into thin air. There are those in the know of how to play the game, that continuously make profits on those who loose. 99% of investors are not in the know of how to invest their money in the market, thus having to pay for that knowledge with fund managers who make big bucks from all those who trust them to make the right choices for them. However, many times over, they can only go so far in being right with the choices they are making for less savy investors. All of my current clients do not understand their 401(k)s, 403(b)s, and the like. They have no idea. They 'trust' either the agent that spoke to them or their HR director, both of which, many times, do not understand fully themselves.

So, now that the country is in termoil concerning wall street, the SEC wants to control IAs and not have the states regulate them. If the securities industry invented IAs, then they should regulate them. However, the insurance companies invented IAs and not mutual funds. The SEC regulates variable annuities offered by insurance companies and it is right to do so since the separate investment monies are actually invested in the secondary markets baring all associated fund and fee charges customers are unaware from their quarterly statements.

If IAs were actually invested in the market, then I could understand the SEC wanting to regulate them. Since, they are not, then it does not make sense to regulate something that is being handled and should be handled at the state level. The state regulators are better prepared to monitor activity with these annuities than the federal government. The SEC has way too much on its plate to take on regulation of these products which are in no way tied to securites. How this regulation even started is in question regarding the boundary lines between the federal government and the individual states.

Now, this proposal is being delayed, and I can only assume because the SEC is busy trying to deal with the current mess on wall street which should have been more closely watched by the SEC and was not. There is no explanation as to why the delay. In addition, I have noticed that with the proposal, the SEC is relaxing the reporting requirments to the insurance companies on IAs. Why is that the case? The total reason behind the existence of the SEC is to insure that the investor is totally aware of everything when it comes to their investments in the secondary markets, when indeed this is not the case. Just because the SEC requires a prospectus to be published containing needed information for one to make a sound decision on an investment, does not mean that everything was taken care of. For it has not. Try reading a typical prospectus and you will see my point. All a client wants to do is invest their money and make money, period. They don't have the time nor knowledge to read such boring material required by law. All a client wants to do is read a quarterly statement and know they made money on their savings. If they knew all the charges and they appeared on their statements, maybe they would think twice about where to put their savings. When they find out that their broker still made money on their money even when they lost money, they would think twice about where to put their savings.

Please do not screw up a good thing for those American investors who want to make money on their life's savings and not have to do it by risking it and having someone in the know take it from them due to greed. IAs are a great investment as regulated by the individual states and it is my opinion, they remain regulated in that manner. If you so choose to take over IAs, then also, change the law on quarterly statements to reflect all charges to clients on their investments. What's fair is fair...so let's play the game fair.

May God Bless You and Yours!
The Lord giveth, and the world can't take it away!