July 15, 2006

To whom it may concern,

I happen to be both an elder law attorney and estate planning attorney with an LL.M. in Taxation (a tax law degree). I also have, for a number of years, been involved as a director of education for a financial planning organization, have had a principal's license in the securities industry (which I rarely used), and have been a plaintiff's attorney in a number of securities arbitration actions brought before the NASD. I have lectured for various bar associations on elder law related matters, and have taught courses for CFP credits to financial planners. I have practiced law for twenty six years.

There is no question in my mind that strict regulation of the sales of variable deferred annuities is absolutely essential in order to protect our senior citizens. Currently, I have a matter in front of me where an elderly client with eight years of formal education was convinced by a greedy salesperson to invest virtually 100% of such person's investment assets (including all of the person's already tax deferred IRA monies) in such variable annuities. The client was looking for security, and was told that annuities are secure, eventhough virtually all of the annuity funds were allocated to growth and aggressive growth subfunds. Of course, this was done as the market was falling, and my client lost a large portion of his life savings.

The above event may sound egregious, but it is not the only situation in which this was done. Confidentiality requires that I go no further than to say that I know of other circumstances where similar things happened. Sometimes this behavior even occurs at bank branches, where customers are very ready (especially those elderly individuals with CD's) to trust bank recommendations.

Since deferred variable annuity commissions on larger sales are often many times what commissions on similar dollar sales of mutual funds would be because of commission breakpoints allocable to mutual fund sales, many of the people that I know rationalize sales of annuities constituting a large portion of their customer's portfolio. In fact, I frequently talk with brokers at wire houses, insurance companies, and banks, who try to convince me that annuites are great investments. The truth of the matter is that for most people, deferred variable annuites are just high cost investments whose tax advantages are over rated and which are often over sold due to high compensation structures. As a result of these high compensation structures, replacement sales which should not occur often do, and supervisory personnel do not appear to be doing their job in restricting and qualifying sales. Money talks in the securities and insurance industries, and without clear guidelines that have to be adhered to, supervisory personnel will find a reason not to put a stop to sales that significantly enrich their firms, even if such sales are unsuitable and violate 2310 and the various Notice to Members which remind members of their responsibilities with regard to the sale of variable annuities. Significant abuse is out there. I know because I regularly review the assets of senior citizens as an elder law attorney.

In short, as a member of the National Academy of Elder Law Attorneys, a group committed to protecting the interests of senior citizens, I urge you to tighten up and clearly define suitability standards, as well as the oversight of sales, relating to variable annuities.

Sincerely yours,

Neil Lubarsky
4 West Red Oak Lane Suite 110
White Plains, N.Y. 10604