Subject: File No. SR-NASD-2004-183

September 8, 2005


I support this new rule but have these comments:

1. Clarification is necessary, or an exemption needs to be noted, that the practice of determining suitability by gathering essentially financial planning information and then applying it when recommending variable annuities which compensate reps on a commission and fee basis is not engaging in financial planning requiring RR registration as an investment advisor. For example, lets say that in assimilating and reviewing the customer information and the product attributes and features that the RR determines that the customer could well be served by a variable annuity to lower tax, avoid probate and pass on the asset at death to a beneficiary without risk to principal typical of most other investments. Is this financial planning advice or recommending an investment? Does the matching-up of an enlarged picture of the customerís financial circumstance and intended use with product features to the customerís greater benefit and purpose entail financial planning? Does requiring members to determine the percentage allocation of net worth suitable to a variable annuity and the allocation among sub-accounts entail asset allocation and therefore become financial planning? If part of the compensation to the RR is on-going fee income and the advice were deemed to be financial planning advice because it concerned an estate goal and not specifically an investment goal, does the RR need to be registered as an RIA?

2. For most retirees the second largest asset they have is their accumulated retirement account assets, and may be their entire liquid net worth. The proposed rule inherently implies that something less than 100% is suitable but gives no rational or guidance. If the NASD and/or SEC believe that a Member should determine what is an appropriate percentage of liquid net worth to be invested in a variable annuity, guidance should be given to Members to make said determination so that Members are not penalized later for their judgment. Presently no rule requires a member to determine a customerís asset allocations (that would be offering financial planning advise if a fee were earned) or to determine what amount is suitable to be invested in other securities, why not?. Assuming the answer pivots on liquidity, the proposed rule should set guidelines for Members and specifically address the use of variable annuities as rollover vehicles for retirement assets. To serve and protect the customer the same data need be gathered to ascertain suitability of all investments not just a variable annuity.

3. Conspicuously absent from this proposed rule is any mention of COSTS. Since variable annuities can have extreme costs particularly when riders and money management are included, the proposed rule should require some review of the total costs of variable annuities versus other investment options as well as provide guidance to Members.

Lawrence S. York
Interactive Planning Corp.