November 14, 2008

Subject: File No. S7-14-08

I am a member of the Financial Planning Association (FPA) with 16 years of experience as a financial planner and investment advisor. I support the Equity-Index Annuity Rule. Recently I had a client for whom an annuity salesman had sold a variable annuity as a rollover IRA in the amount of $125,000 that came from her 401(k). The contract had a nine percent commission and lost money as a result of market activity and was worth only $98,000.. The same annuity salesman then put this money in an equity indexed annuity with a fourteen percent commission and a surrender period of eighteen years. He told her it was safer than the variable annuity and would make up her loss and guarantee against further loss. This also lost value. The client ended up with $70,000 and this was getting out of the contract without a surrender charge as a result of a complaint that she made. She made the decision based on trust she had in the insurance agent and knew virtually nothing about the contract. These products are like marketing Marlboros and Winstons. They are not good for the financial health of consumers. I urge you to implement this rule to help state regulators protect people who are aggressively sold these annuities. No amount of disclosure is adequate. The more disclosure there is the more opportunity to confuse people. Does the SEC really believe that people would agree to invest $100,000 at the cost of $14,000? This is the part that gets glossed over when all the complicated disclosures are made.