November 13, 2008

Subject: I Support the Equity-Indexed Annuity Rule. s7-14-08

SEC:

I am a Certified Financial Planner and I emphasize a strong support for the Equity Indexed Annuity Rule. I am also an MDRT Top of the Table Insurance Producer, and I support requiring registration for these investments.

I hear daily about abusive sales practices used by unregistered insurance folks who pitch equity indexed annuities. Here is one example from one of my clients!

Joe W. has $100,000 in mutual funds. Edith W. has $420,000 in mutual funds in an IRA, and $80,000 in a variable annuity (IRA) with a 7% surrender charge. This is the sum total of their investable assets.

An unregistered insurance salesperson in my town of Denver convinced Edith to consolidate her IRAs into an equity indexed annuity, pay the 7% surrender fee, and promissed a 10% bonus on the lump sum. Now they have a 12 Year surrender period with 12% surrender charges on 80% of their assets. If she, age 70, has any emergencies, she's out of luck, she'll have a huge fee to pay. She doesn't understand the investments, only the 10% guarantee plus the wild promisses of the insurance agent. There is nothing we can do about it.

Totally legal for insurance companies. Totally reprehensible for professional financial advisors.

Make the Equity Index Rule happen.

____________________________
Karl Frank MA, MBA, MSF
Certified Financial Planner ®
A&I Financial Services LLC