November 17, 2008
Gentlemen,
This memo is in connection with proposed SEC Rule 151A. As a Registered Investment Advisor and licensed life and health insurance agent, I am deeply concerned with SECs attempt to label fixed Indexed Annuities as securities. Unlike Variable Annuities or other risk based financial products, the accumulation value of Fixed Indexed Annuities cannot be reduced due to a negative performance of the stock market. In such vehicles, savers are able to participate in a portion of the gains of a predetermined stock market index while protecting their money from all market losses. By definition, such an instrument is fixed and therefore not a security. Only variable products those where principal is not guaranteed are securities.
No policy holder has ever lost money in a Fixed Indexed Annuity due to a market downturn. The insurance industry does an excellent job education and policing its representatives in the mechanics and presentation methodology necessary to assist policy holders in making the best decisions for their safe money.
The stock market debacle this year was a direct result of Wall Street greed and corrption under the umbrella or "watchful eye" of the SEC, it seems incomprehensible that they feel the need to regulate the one financial product which has not lost a dime - the Fixed Indexed Annuity.
I've met with numerous clients over the last few weeks whose mutual fund balances have dropped to levels not seen since the end of the last bear market in 2003. Those who chose ot move their money into safety with Fixed Indexed Annuities enjoeyed steady gains since that time and have not lost a dime during the prolonged stock market sown turn which commenced in Octboer, 2007.