November 13, 2008
Rules Committee,
I am an tax attorney and Certified Specialist in Estate Planning, Trust and Probate Law in California. I am also a member of the Financial Planning Association. I am writing you in support of the proposed rules that would treat annuities as securities under the 1933 Act. As an attorney, I see a great deal of abuse by insurance agents in the sale of annuities. Misleading sales pitches are frequently used to entice elderly individuals into purchasing them even when it is not suitable to their situation. For instance, a common pitch involves selling annuities as “exempt” assets in qualification for Medicaid even though that is no longer the case. Annuities are sometimes sold as investments within IRAs and other qualified plans, even though assets held in such plans are already non-taxable until withdrawal. I have even seen annuities sold to persons who will need the funds in the foreseeable future and were not informed of the surrender charge which then applied when the purchaser tried to pull his money out.
In my opinion the proposed new rule is a reasonable and balanced approach to enhancing state enforcement efforts. The rule will help protect the elderly who are in great need of protection from aggressive sales agents. The SEC should make every effort to stop the abusive sale of annuities by aggressive agents by retaining the new rule. Annuities are sold as an alternative and allegedly “safer” investment than stocks and bonds even though this is not necessarily the case.
Thank you for considering my input on this important issue.
Sincerely,
Scott G. Beattie, Esq.