Subject: File No. S7-14-08
From: Michael J. Nedreski RFC
Affiliation: Nedreski Wealth Management

November 13, 2008

Let it be known that as an FPA member and experienced financial planner I am in support of the Equity Indexed Annuity rule whereby the SEC would oversee the sales practices associated with the same. Especially in markets like this where “commission driven” agents will use scare tactics (as if they need them right now) to lure people out of their investments (at a market bottom) to the “safety” of an equity indexed annuity where the client is told that they can stay invested in the market with a guarantee that they’ll never lose money. What they don’t tell them, and I’ve had this happen to clients of mine, is that they are locking themselves into extremely long surrender periods with very steep surrender charges and while the customer may participate in some of the market upside they certainly won’t see it all. For example a customer sells out of a reputable balanced mutual fund right now that’s down say 30% for the last 12 months and then puts their money into an equity indexed annuity with a 10 year surrender period and a declining surrender charge that starts at 15%. If the S&P does 25% next year they may see half of it if they’re lucky. So they’ve sold low, don’t get the full reward of the market upswing, get a brand new long surrender schedule, and pay a heavy penalty if they decide to get out.

SEC oversight is a must!!

Michael J. Nedreski RFC
Nedreski Wealth Management