November 13, 2008
Dear Sirs,
I am a principal with Fortune Management, LLC, an RIA registered with the SEC. I am a member of the Financial Planning Association and have been a licensed life, health, medigap and LTC agent in North Carolina.
I am in favor of the proposed rule because in the course of my planning and investment management activities, I have yet to come across a single consumer who could accurately discuss the equity indexed annuity proposal they had received.
The consequences of misunderstanding the complexities of this product are extremely costly yet in my experience, insurance agents, especially the ones who seem to specialize in selling this product, are either uninformed or unwilling to objectively disclose the surrender charges which support excessive frontloaded commissions, the liquidity risks involved or whether the product is even remotely suitable.
I wish retirement planning were simple enough that a one product solution could fit as often as this product seems to be proposed. In fact, every consumer would be far better served from an objective and comprehensive survey of their financial needs and resources than to be on the receiving end of an aggressive and misleading annuity sales pitch. The elderly aging population who are targeted by annuity sales people are about as ill-equipped to evaluate the merits of this product as the aggressive agents selling it are incapable of explaining it adequately.
While the North Carolina insurance department is trying to cope with reports of equity indexed annuity sales abuses, other states may not have adequate resources so this proposed rule would seem to be a thoughtful way to enhance state regulatory efforts.
If consumer protection matters, this rule should be implemented. Thank you for considering my opinion.
William K. Dix. Managing Member
Fortune Management, LLC