Legal Issue

[mark3a]

I have a prospect who has come to me to help him with his brokerage account. He is with Merrill Lynch and one part of his holdings is in an AXA Equitable variable annuity. The client is telling me that he and the broker discussed it, but that he was not sold on it, and then a few days later the contract shows up in the mail. It is in the client and his wife's names, but neither signed the contract. The Merrill branch manager is telling him that since he and the broker discussed the annuity, he did not need to sign the contract. I am assuming the broker has discretion, the client is unsure about that.

But, wouldn't the client and his wife have to sign the annuity contract for it to be valid? I am going to talk with our compliance people Monday and get their input on how to have him pursue this.

 

[HarryRenard]

THe broker can have that type of descretion.
But to be honest most of these insurance companies fold at the first sign of trouble (from a client) and should let him out of the contract no problem, I see it all to often now.

 

[VolAgent]

Tell him to promptly execute his free look. He can also file a complaint against his broker if he wants. That ought to quickly resolve the issue.

 

[dgoldenz]

Tell him to promptly execute his free look. He can also file a complaint against his broker if he wants. That ought to quickly resolve the issue.

^Follow this advice.

 

[Franz Kafka]

Better than talking about "bottoming out of $", sticking the money into Forex and end up losing it all - I actually saw a statement. I've never been an RIA/IAR but I had heard RIA VA policies didn't allow any guaranteed living benefits. Ask to review the policy. Managed accounts are so easy to replace if you come across one.

 

[arnguy]

Check with PrePaid Legal. He will send the Merril Lynch manager a scarry (sic) letter!

 

[mark3a]

The client has been in the annuity for about 1 year, so he is past his free look. The client called the State Department of Insurance, they suggested writing AXA a letter. He is going to send Merrill a copy.

My compliance people are telling me that we would never accept the annuity contract without signatures, even with discretion authority. I guess I don't understand how Merrill would allow a broker to put a client into a 10 year contract solely based on that discretion authority. What other types of contracts would they allow the brokers to put clients in?

This is a suitable product for the client, but it was poorly explained why it is suitable, and exactly how it works. He has made up his mind that he wants out.

 

[VolAgent]

This is starting to sound like one of the stories of when a person suddenly "forgets" about why they are in an investment or insurance product when it meets their needs. Yet another example of why it is so important to document. Remember, you're only hearing one side of the story. His broker might have a whole file documenting how he advised the client all about the product, and the client agreeing to it.

 

[HarryRenard]

Sometimes it is best not to get involved, especialy if you are saying that it is a suitable investment. I am not saying this is one of them only you know the specifics, but I would think about it long and hard.

 

[BNTRS]

If he never wanted the investment and never signed delivery paperwork for the annuity he can still free look it. It's up to the Broker to produce proof of delivery paperwork and if it doesn't exist it can be done.

I know someone who was at an agency where a rep who left advised all his clients to free look annuity contracts that never had complteted delivery paperwork signed and maintained (the annuity company said they weren't needed and no one took issue with this). I know a few companies that still don't require delivery paperwork, I still document delivery of a policy.

These are after all still insurance products.