November 14, 2008

Subject: File No. S7-14-08 Equity Indexed Annuity Rule

I am a Certified Financial Planning practioner and have been for 13 years. I am a current member of the FPA and president of the FPA of Northeast Florida. I am a partner in a Registered Investment Advisory Firm and provide comprehensive financial planning and investment advice to retirees.

I am in support of the rule that would create SEC oversight of equity indexed annuities.

In my career, I have taught many investment education classes and can assure you that consumers do not understand the various annuity products that exist. Consumers do not understand the compensation structure of annuities and the incentives they create for the people that sell them. Consumers do not understand the costs of these products, the surrender penalties, the complex nature of the various indexing procedures and how that can dramatically impact their returns.

Consumers hear "earn equity like returns without equity like risk" and that appeals to them. Given the declines in the market, investors are very risk averse today. At the same time, they understand the need for equity exposure to provide the opportunity to regain lost value. The combination of these two factors makes the environment ripe for the oftentimes deceptive sales practices used by people who sell equity indexed annuities.

I can recall at least one client who fell prey to these practices and was told by the seller of the annuity that they had a "proprietary method" of taking money from my client's IRA without paying income taxes. The salesperson would not disclose details of this method because of its "proprietary nature."

These products are complex, they are a derivative in that their value is determined by some other financial product or index by a formula that is then applied to the owner's contract to determine the value. There can be no practical reason to not regulate these products as a security. Any exemption from such regulation can only be the result of effective lobbying on the part of the people that have a financial stake in less oversight and transparency. I think the current economic environment is an indication of how that thinking has worked out.

I appreciate your consideration.

Sincerely,

William S. Hart

William S. Hart, CFP, MBA
Retirement Strategies, Inc.