November 14, 2008

Subject: File No. S7-14-08

Dear Sirs,

I am writing to share my opinion and support of the rule for greater oversight of Equity Index Annuities. These products are relatively new to the marketplace and are being touted by insurance salespersons and one of the best investment products on the market today. This is especially relevant in the volatile financial markets we find ourselves in currently. As with most annuity products the equity index annuities are full of "guarantees" for the purchasers which is the premise by which most are sold. The largest concern for most investors is the risk of loss and these products do address that. The two main issues which are generally overlooked are the returns in up markets and the ongoing costs (including the CDSC's). These are generally overlooked in the discussion with the client. This has led to many investors not receiving what they thought from these products.

I personally have had many discussions with potential clients who have wanted to take their business from these investments after lengthly discussions centering around the participation and cap rates which are contained within these products and not only are not generally discussed with the investor (they are extremely complicated for the lay person to understand) but are able to be altered at the insurance companies discretion. An investor is excited for the bonus feature that many of these products offer as an incentive to invest only to find our later that this has extended the length and depth of the CDSC which must be paid if they wish to divest themselves of these investments. If these are touted as investments which allow the investor to protect assets when the market declines and share in market gains then the provisions of those gains should be better described. The main consequence of this is that if markets go up over time and this is the premise for investing in general then these products do not allow for very much in terms of positive returns because of the calculation of the participation and cap rates. After many discussions with potential clients and comparing their returns over time vs. the market the desire to divest themselves of these products is a conclusion they often come to on their own. The discussion then leads to the restriction of this divestiture due to the CDSC often times which can be above 10%. When the investor asks why they were not made aware of these details within the product my only answer can be because it is not in the best interest of the seller to make them aware of these details. This does not bode well for us as an industry which is based upon gaining the faith and trust of out clients to manage their life savings. I would hazard a guess that if more investors were made aware of these facts that they would be more hesitant and thoughtful about their purchase of these products.

As someone who has been in the business for over six years I have come to know these products and their potential pitfalls. As a firm we have decided not to sell these products to our clients as we feel there are better alternatives to accomplish the goals of both preservation of capital in declining markets and positive investment results in positive markets while still retaining flexibility. We could increase our profit dramatically if we decided to use these products but at the end of the day that is in our best interest and not the best interest of our clients. Our firm has been in business for 21 years and enjoys a high client retention rate as a result of our consistent advice, service and reasonable cost structure.

I encourage you to avoid the influence of the lobbyists from the insurance industry and look our for the best interest of the current and future investors. We all have our requirements when it comes to proper disclosure and there are many who do not convey all of the relevant facts relying upon the transmittal of a prospectus to accomplish the requirement. This cannot be commonplace in our industry to hide behind a document vs. having the conversation or placing the facts within the marketing literature. All of our discussions with prospective clients includes a detailed discussion about fees and expenses because at the end of the day the more a client pays the less they keep. No other industry is as varied and nebulous about costs as ours and it is to our detriment from a confidence and trust aspect for our clients.

Thank you for your consideration,

Jeffrey N. Lido CFP®
Regional Vice President
Advance Capital Management Inc.