Comments on NASD Notice to Members 04-45

Dear Ms. Barbara Sweeney:
I am a Certified Financial Planner and have been practicing for over 20 years. As part of my practice, I am licensed to provide a wide variety of investment products to my clients including variable annuities.


I am writing to you because I believe the NASD's proposal to impose specific suitability and disclosure requirements on the sale of variable annuities is unnecessary, will provide no meaningful protection to consumers and will impact my business. I urge you to withdraw the proposal.


My broker/dealer requires me to complete a seperate suitability document regarding the sale of variable annuities. In addition to full disclosure of the risks and fees, we are also required to give reasons why the client decided to purchase the variable annuity. In other words what are the benefits ( deferral, enhanced death benefit, guaranteed minimum lifetime income). The NASD's proposal will ONLY require disclosure of the risks, NOT THE BENEFITS. We already are required to disclose the risks to our clients.


I firmly believe that people who engage in misleading sales practices should be aggressively prosecuted and subject to meaningful sanctions. However, your proposal would duplicate requirements that are already in place. NASD rules already contain a general suitability rule that applies to all sales of securities, including variable annuities. If regulators really want to protect consumers, appropriate enforcement of the existing suitability rule rather than adopting a new rule is the answer. Likewise, variable annuity prospectuses, which are already reviewed by the SEC, already discuss the fees, risks and expenses associated with variable annuities. Requiring a separate "risk disclosure document" would duplicate information already found in the prospectus and reduce the likelihood that consumers will read the most important source of information on the product -- the prospectus. Instead, NASD should focus its efforts on getting consumers to carefully read the prospectus they receive.


Finally, I believe that the proposal is a "solution in search of a problem." I do not think the available data supports NASD's claims that the level of sales problems in the variable annuity marketplace calls for the adoption of the proposed rule. For these reasons, I urge NASD withdraw the proposed rule. Thank you for your consideration of my views on this matter.




Michael Howard
3189 Danville Blvd. Suite 265
Alamo, CA 94507