Is this Really Legal??

[Justin Bilyj]

Watching a youtube video pop up and I saw this ad pop up that said annuities with 17.23% return. I clicked on it and its some group, incorporated, has a list of advisors who have registered with the site.

I don't see any asterisks or anything. I think it's pretty crazy to be able to advertise a 17.23% return on an annuity...
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[DHK]

The real question is: Is it true? If so, what are the strings attached?

The 10 biggest market misconduct issues to avoid | LifeHealthPro

9. Failure to adhere to advertising requirements.

Just as health insurance drives issues regarding the timeliness of paying claims, life insurance and annuity business drive issues regarding advertising requirements. Donovan says that the classic example of an advertising-driven regulatory problem involves fliers distributed for financial preservation workshops. Copy that promises to deliver a return at a multiple higher than what the client is currently receiving, with no risk to their principal, is the kind of language that makes regulators take notice and ask, "They said that?"

Different states will provide different levels of detail in their complaints over questionable advertising practices, Donovan says. Virginia, in particular, is known for providing deep levels of detail on practices it finds dodgy, parsing particular fine points in the advertising. Other states, however, may only note that advertising in question "appears to be misleading," and offer no further comment. When the regulators are vague about where you might have colored outside of the lines, that's not a good sign.

 

[Josh Landis]

Watching a youtube video pop up and I saw this ad pop up that said annuities with 17.23% return. I clicked on it and its some group, incorporated, has a list of advisors who have registered with the site.

I don't see any asterisks or anything. I think it's pretty crazy to be able to advertise a 17.23% return on an annuity...
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Unfortunately, I don't think it's illegal, as long as they're not securities licensed, they don't have the compliance issue if they aren't mentioning any carriers...but there's no way that any annuity is returning that in a year, I guess they could be meaning that it has returned 17.3% over the life of the contract, but who knows, obviously it seems misleading based on your comments.

 

[VolAgent]

Wasn't it advertising like this that helped turn the spotlight on Glenn? Perhaps not illegal, but it certainly can bring unwanted attention and be used against you in other matters.

 

[DHK]

I remember reading something that Glenn was advertising 12% rates on billboards. Don't remember the details, but I don't think he asked for any compliance approvals on those ads.

Anytime you advertise a rate, it's a clue that it MUST go through that carrier's compliance department. It must reference the name of the product, policy forms, and an expiration date for that rate (or a "good through" date).

 

[briko3]

The new thing I've been seeing is "total return". 17% return after 5 years. Or 8% income (after deferring it 10 years), etc.

I guess it gets people in the door to see what you have.

 

[scagnt83]

It is "legal" as long as it is true. Does it abide by state insurance regulations is a completely different matter. Most states have regs against "misleading" advertising. Obviously that is either a first year rate or a total return figure. If the ad gives the impression that return is guaranteed each year, then the state insurance regulators could certainly decide it violates the regs. The catch is that the state doi usually has to receive a complaint about the advertising to launch an investigation.

Then there is the issue with the individual carriers. You usually have to get carrier approval if you mention the carrier by name, or mention their specific interest rate that is unique to just that carrier (which the ad seemed to do). So if the carrier ever found out they could easily cancel the agents contract because they violated advertising guidelines.

So it is not illegal in a criminal manner, but in a regulatory manner it is a grey to dark grey area.

 

[AlTheGud1sRtakn]

Could be a variable annuity that grew that much in the past year. Still if it is variable you'd think there would be more to the ad as the regulations are much tighter.

 

[DHK]

No variable product that contains securities should be advertising ANY interest rates, or implying a guaranteed interest rate of any kind.

The only thing it COULD say would be "averaged x% over the (insert time frame here)". And that would be very difficult to get approved by a B/D, let alone FINRA or any mutual fund/variable annuity company.

 

[Justin Bilyj]

Could be a variable annuity that grew that much in the past year. Still if it is variable you'd think there would be more to the ad as the regulations are much tighter.

I was just thinking of the same thing, Im glad DHK chimed in.

My beef with this is it makes good agents look bad, and when you meet with prospects and see some crazy rate like that will wonder why my rates can't even come close to that, doesn't help to start off on the right foot.