Colorado Bankers (CB Life)...

[Allen Trent]

Is'nt it the feduciary responsibility of the (in my case LPL financial) agent to make the client aware of the real risks of these products

Was the LPL acting in a fiduciary capacity on this case? For instance, was the CBL Annuity listed on your LPL statements or were you paying LPL annual advisory fees on the CBL. If so, you may indeed have a better case.

Here is a link showing CBL was targeting the fee based advisors for the commission free product. DPL Financial Partners rolls out four-year fixed annuity from Colorado Bankers Life Insurance Company - InsuranceNewsNet

Here is a link to a law firm I had seen last year was looking for clients that matched this similar relationship with CBL buyers. This law firm article may be a bit off base as it is talking about securities, not insurance. But your situation may specifically rise to this level of you had engaged a fee based advisor who had a fiduciary level responsibility to you. Colorado Bankers Life Insurance Annuities - Investor Alert

 

[scagnt83]

Was the LPL acting in a fiduciary capacity on this case? For instance, was the CBL Annuity listed on your LPL statements or were you paying LPL annual advisory fees on the CBL. If so, you may indeed have a better case.

Another important question:

Did the funds for the Annuity come from funds managed by LPL in a Fiduciary Capacity?


IF so, the transaction would be subject to Fiduciary Standard regardless of the type of classification the Annuity Sale fell under. And Im 99% sure that would still be true even if a different LPL advisor was used for the Annuity Sale.

 

[David Nyman]

Let me see if I understand. lPL Financial can be acting in as a fiduciary or not depending on where the funds come from? The funds were originally in a CD and transferred to buy the annuity by the LPL Agent. Seems unethical that an investment advisor can be acting in your interest or theirs depending on a technicality. Seem wrong that an investment advisor can look the other way and put you into a a bad investment just because the make a big commission..

 

[Newby]

Let me see if I understand. lPL Financial can be acting in as a fiduciary or not depending on where the funds come from? The funds were originally in a CD and transferred to buy the annuity by the LPL Agent. Seems unethical that an investment advisor can be acting in your interest or theirs depending on a technicality. Seem wrong that an investment advisor can look the other way and put you into a a bad investment just because the make a big commission..

An annuity can not be called an investment. Unless it a variable annuity which it tied to market funds.
A regular annuity is an insurance product NOT an investment. Agents have lost their license for referring to them as investments.

 

[Tahoe Ray]

Seem wrong that an investment advisor can look the other way and put you into a a bad investment just because the make a big commission..

I know it doesn't matter at this point but your rep would have made a lot more money putting you in some type of managed account.

Fixed annuity commissions largely suck.

 

[scagnt83]

Let me see if I understand. lPL Financial can be acting in as a fiduciary or not depending on where the funds come from? The funds were originally in a CD and transferred to buy the annuity by the LPL Agent. Seems unethical that an investment advisor can be acting in your interest or theirs depending on a technicality. Seem wrong that an investment advisor can look the other way and put you into a a bad investment just because the make a big commission..

It depends on the type of contract you have with LPL for their services. They provide Fiduciary Services for managing assets and fee based planning. They also have a retail brokerage that are sales based who do not work under a Fiduciary Capacity.

So hypothetically, you could have both with them. Or just one, etc.

Do you pay a percentage based fee on all the assets this guy manages for you? If so, its likely an account under Fiduciary Standard. If you pay per transaction, it is not.

If the funds were an IRA then that could impact the situation as well possibly.

 

[scagnt83]

I know it doesn't matter at this point but your rep would have made a lot more money putting you in some type of managed account.

Fixed annuity commissions largely suck.

Very true. CBL was paying what? 2%?

Id bet most guys in an outfit like LPL were doing it just to chase yield. It had nothing to do with the comp. They would make more over 4 or 5 years with the wrap fee on the managed account.

Now the banks that were flipping CDs into CBL annuities... they did it for the money... jmo

 

[Allen Trent]

Now the banks that were flipping CDs into CBL annuities... they did it for the money... jmo

I honestly never understood why banks began pushing annuities. It made little sense to me because they usually took an asset they had on deposit like a CD where they were lending the deposited money out at a higher interest than they were crediting. IE. lending at 5% & crediting 3% on deposit for an annual spread of 2%. By selling an insurance companies annuity, they were sending the asset elsewhere for a 1 time commission as the bank was merely the insurance agent on the annuity & the bank employee a sub agent that got many times little or none of that 1 time commission. If a CD stays on deposit for say 10 years for many customers, that is 20% the bank could have made on the spread of crediting & maybe they received 2,3 or 4% 1 time to sell the annuity.

The oddest part is the corner bank employee many times pressuring people to buy the annuity didn’t get paid on the annuity sale, but needed so many points on a monthly or quarterly grid to hit their salary benchmarks for # of various transactions. So, a comp grid incentivized the employee to push money to leave the bank & go to the insurance carrier.

Just never understood that

 

[scagnt83]

I honestly never understood why banks began pushing annuities. It made little sense to me because they usually took an asset they had on deposit like a CD where they were lending the deposited money out at a higher interest than they were crediting. IE. lending at 5% & crediting 3% on deposit for an annual spread of 2%. By selling an insurance companies annuity, they were sending the asset elsewhere for a 1 time commission as the bank was merely the insurance agent on the annuity & the bank employee a sub agent that got many times little or none of that 1 time commission. If a CD stays on deposit for say 10 years for many customers, that is 20% the bank could have made on the spread of crediting & maybe they received 2,3 or 4% 1 time to sell the annuity.

The oddest part is the corner bank employee many times pressuring people to buy the annuity didn’t get paid on the annuity sale, but needed so many points on a monthly or quarterly grid to hit their salary benchmarks for # of various transactions. So, a comp grid incentivized the employee to push money to leave the bank & go to the insurance carrier.

Just never understood that

They net more y1 from the annuity. They dont want all the CDs to go to annuities. But a certain amount, in years they need more revenue on the books, can be a short term benefit to their balance sheet. Also, there is virtually zero service work for the bank. Loans take a lot of admin on the banks part, especially y1, so the y1 net is much more on annuities if you include the labor cost of the loan.

Also, they often use it as a tool to save CDs that are walking out the door. That reason makes a lot of sense. But how they landed on such a sh*ty low rated carrier... idfk. Greed of the highest rate on the street I guess, it certainly wasnt the highest comp, but it was an easy sale at those higher than average rates.

 

[DayTimer]

but it was an easy sale at those higher than average rates.

Reminds one of certain unrated FE insurance carriers with lower than median market rates AND more lenient underwriting for people with multiple comorbidities.