August 27, 2008
As a veteran insurance professional I fiercely encourage the SEC to abandon 151A.
This regulation is overreaching and ultimately will hurt the very consumers it intends to protect.
I speak as a marketer of Indexed Annuities and as an owner as well.
Part of my retirement savings is in a traditional 401k widely diversified. The remainder is in an indexed annuity. My 401k has lost 20% of its value. My indexed annuity has increased in value during the same time period! The irony is that the worst designed indexed plan still protects principal and locks in gains…and never loses value!
Artificially defining these products as securities will not broaden their distribution. It will simply put their distribution in the hands of the same industry that has given us Auction Rate Securities and presented them as a safe and liquid investment.
In my side of the business we find time and time again consumers of all ages who have been placed in risky investments on the recommendation of their Securities Broker. These consumers dread losing value yet they are consistently placed in programs that could lose all of their value!
Maintaining Indexed Annuities as fixed products under the jurisdiction of the various state insurance departments provides a welcome alternative to products pushed by the Securities industry. This competition is healthy and ultimately benefits the consumer.
151A is anti-competitive and anti-consumer. It should be rejected by the SEC Board of Governors.Paul Garofoli, FLMI
National Western Life