November 13, 2008

Subject: File No. S7-14-08

My name is Elaine Collins. I am a member of the FPA and have served as an independent Certified Financial Planner since 1985. I support the proposal allowing the SEC oversight of Equity-Indexed Annuity sales (in addition to state insurance commissioner oversight).

My concern regarding this issue is a result of numbers of experiences relating to consumers buying these annuities and not knowing what they have gotten themselves into financially. Having taught consumer education classes for years, I have fielded questions that belie a basic misunderstanding of who annuities might be suitable for, total misunderstanding of the fact that an IRA and an annuity are not the same or that the policy holder will pay taxes (and maybe surrender charges) on withdrawals from the contract, or not even understand that the word "equity" refers to stocks.

Most recently, an older woman came to me upset about how high her taxes were. In reviewing her income tax return, I saw that she had withdrawn fully taxable monies from her indexed annuity contract which had increased her taxes unnecessarily. She was horrified! She said the agent told her that she could take out her money any time she wanted, but neglected to talk about the tax ramifications of putting IRA monies in the annuity. The worst part of the situation was that she could have withdrawn monies from other investments with very little tax liability.

Please do not drop the rule proposal. Consumers need protection from overzealous salespersons, some who do not even understand the full ramifications of selling this product to individuals/seniors for whom it is clearly not suitable.

Sincerely,
Elaine L. Collins, CFP