August 27, 2008
Gentlemen and Ladies, I have followed with interest the SEC and Finra concerns regarding the sales practices of Index Annuities. I strongly support efforts to make sure that these products are sold properly and are suitable for clients who purchase them. However, I urge you to consider withdrawing the proposed new rule since in no way can an index annuity be considered a security. I believe State regulatory authority should govern their sale. Index annuities are Fixed products offered by insurance companies which are regulated by state insurance departments. I have no problem with broker dealers exercising proper supervision of the sale of any product offered by their registered representatives including fixed products. However, non registered reps should not have to become registered in order to sell fixed products. In effect your proposed new rule would create such a requirement. As you know, the interested declared on index annuities is linked to the performance of various indexes, the monies invested in indexed annuities are not invested in equities. One final point of comparison. The SEC nor Finra claim to have authority over the sale of Universal Life, or Whole Life, products regulated by the states, yet the underlying assets invested to support these products include Bonds, both corporate and government. It is hard to see how your regulatory bodies can claim to have regulatory authority over index annuities without next claiming such authority over fixed life insurance or perhaps other fixed annuities. Please do not allow the activity of a few sales representatives who may not have sold index annuities properly in the past serve as a reason to regulate products over which Congress never intended to give you authority.
Respectively,
Dan W. Harris, CLU, ChFC
Senior Managing Partner
Premier Planning Group