Subject: File No. S7-14-08
From: Dan Wyson, CFP

July 30, 2008

I have long noticed that the biggest problem with Indexed annuities has been the people selling them. Many are insurance agents who do not understand derivatives, which EIAs clearly are. A non-licensed person could not sell an SP Index fund so why permit them to offer products whose returns are completely linked to the SP? It makes no sense and offers little protection to the buying public. The main complaint I have received from EIA purchasers has been that the agent did not correctly explain how they work. In many cases this is because the agent did not understand the product, or because of weak disclosure laws, they did not properly explain it.

I fully support measures to classify these products as securities as it seems to me it is hard to view them as anything else. If the main purpose of the SEC is to protect the client, then they should require products to be sold by agents who are trained and licensed in securities. I am a securities principle and also hold an insurance license. There is no comparison in the level of training between the two. My education in insurance gave me no information at all regarding market indexes and how they function. Evidence of the problem is easy to find. Just listen to the thousands of complaints that come in weekly surrounding EIAs. I have sold many myself but only after I fully disclose to my clients exactly what an EIA is, and what it is not. I was not qualified to do that when I only held an insurance license.