I must express my disappointment in John Huggard’s article, “10 reasons variable annuity sales are soaring” (Senior Market Advisor, Dec. 2006). I’ve owned and used Mr. Huggard’s “Investing with Variable Annuities” book since 2003, but he must reconsider reason No. 1 from his article, “Commission-free investing.”

Just because a client’s initial balance matches the amount of his/her check does not for an instant qualify as commission- free. The M&E expense wrapper, which lasts forever in most annuities, represents substantial expense, but the real issue is that it gives a falsely altruistic impression of annuity sales. Any number of agents/reps will distribute Huggard’s article for the express purpose of clouding the commission issue with regard to their prospect’s investment business.

To characterize annuities as commission-free is a mistake and both author and publisher should have enough respect for our profession to protect it. Even if there is calculus to rationalize the claim, commission-free is an ethical and professional quagmire. Industry leaders should know better.

Jon Sommervold
Principal Financial Group
Sioux Falls, S.D.