Comments on NASD Notice to Members 04-45

Barbara Z. Sweeney
NASD
Office of the Corporate Secretary
1735 K Street NW
Washington, DC 20006-1500


Dear Ms. Sweeney:

I am fortunate that my office is and our representatives are affiliated with Capital Analysts Incorporated as our broker dealer and that they make available to me, after thorough due diligence, many variable annuities from a diverse group of insurance companies. This offers me the opportunity to select not only, the proper investments, but also the proper ownership/annuitant driven contract structure, expense and mortality charges, special riders (if suitable) and redemption periods.

 

The proposed point of sale risk disclosure you are proposing should be provided for by the issuing insurance company not by my broker dealer. If my broker dealer has to prepare, and continuously update disclosure brochures for the variable annuity options available to men I am concerned that my client would be most hurt, because from a practical point of view the number of options available to me would have to be limited so that the cost of such a practice would not be burdensome, and obviously that cost would be passed on to my office and to my client in some fashion.

 

Also, I am managing associate in my office and the task of a designated principal reviewing each representative's application would fall to me with the new rules you are proposing. That takes me away from helping my clients, and puts me in a role that I would need training for and for which there would no compensation, only expense. This unpaid time would directly impact my office revenues and weaken the environment I have worked hard to create for my employees and take away from truly servicing my clients. Not to mention the one day turn around would not be practical in may instances.

 

For representatives who would need a home office approval the burden of review would be placed with individuals not familiar with a client's financial situation, or at the very least set up the risk of creating a backlog of reviews that again take away compliance and supervisory staff away from their present jobs, and repeats the efforts of the planning done by the representative during the client review and suitability discernment process.

 

These rules set up an uneven playing field when other types of annuities are excluded from these rules as is variable life insurance

 

It is my hope that the intent to protect the consumer does not unintentionally put unrealistic business burdens on their advisors. This rule certainly does that.

 

Sincerely,

Leo G. O'Connor
O'Connor Investments, Inc.
4700 Vestal Parkway East
Vestal, NY 13850