November 14, 2008
To Whom It May Concern:
As a member of the Financial Planning Association (FPA) and National Association of Personal Financial Advisors (NAPFA), I support passage of the rule cited in the subject line regarding SEC oversight of indexed annuities. I believe indexed annuity products are often misleading with regard to their high hidden costs as well as their exaggerated investment benefits.
My background includes a 30+ career as a practicing CPA. I have attained the life insurance industry designations of Chartered Life Underwriter (CLU) and Fellow, Life Insurance Management Institute (FLMI).
While practicing as partner of a CPA firm, I reviewed several annuity and life insurance products for both insurance companies and prospective annuity or life insurance purchasers. While performing such reviews, I saw several misleading and deliberately confusing product claims. However, none have been so egregious as the hyperbole by insurance companies and insurance agents surrounding indexed annuities.
As a fee-only financial advisor, I have first-hand experience with clients who were ready to invest large sums of money into indexed annuity products because they thought the annuities were a fantastic investment opportunity with little risk. However, after showing my clients the actual product provisions in a detailed and analytical manner, they saw the product in a much different perspective from the insurance agent’s sales pitch.
I do not believe state insurance commissioners have adequate enforcement resources available to monitor such insurance products sold as high income – low risk investment opportunities to individuals that are ill-suited to purchase them.
Rod Roath, CPA, CFP®
Money Matters, Inc.