More Agents Get Nailed For Selling Annuities

[VolAgent]

Well I've been talking about this and getting blasted for years regarding this exact subject. An agent who only holds an insurance license is not properly trained to advise their client to move a dollar from their investments to an annuity.

Have we seen a real test of this yet? Every one you have posted so far, there was more to the story. Forget the annuities, this guy was managing brokerage accounts for which he lacked the right license. Then you can add in the annuities, and what sounds like using annuities with too long of a time-frame for the policyholder.

Source of funds is much ado about nothing. In every single case that I've seen, there was more to the story. The annuity was unsuitable from the get-go, no matter where the money came from. The client wasn't left with enough liquidity, was tied up for too long, or the agent represented himself as something he wasn't. While it appears our states feel otherwise, there should be nothing wrong with an insurance agent opening an annuity for a client that is moving the money from securities. As long as the insurance agent made sure the product is suitable for the client's liquidity, time-frame and risk tolerance, where the money comes from should be irrelevant.

 

[DHK]

It's actually not "more to the story". It's reading the story in its entirety to determine the real crime &/or violation.

healthagent has a severe case of confirmation-bias by always looking for things that confirm their own opinions.

 

[Norwayguy]

My question on source of funds always come down to where is the line:

“The recommendation to replace securities such as mutual funds, stocks, bonds and various other investment vehicles defined as securities under the Arkansas Securities Act is the offering of investment advice. It is unlawful to offer investment advice unless one is registered (licensed) with the Arkansas Securities Department as an investment adviser or investment adviser representative.”

So if I show a client and Index Annuity and they say I want this and want to take money from Securities, just where have I made a recommendation for which I am not licsensed? My real concern thought is 6 months later when someone trys to turn this into something else and will the client remember that I never once recommended the sale of their existing securities?

I think it leads to having to become and IAR or RIA and dealing with those hassels again just to sell Index Annuities.
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Well I've been talking about this and getting blasted for years regarding this exact subject. An agent who only holds an insurance license is not properly trained to advise their client to move a dollar from their investments to an annuity.

I'm sorry John, an agent who holds only an Insurance License can be properly trained to advise a client on annuities. Now is every Insurance only Licensed individual capable of this, no, you have commented many times that you are not but just because you are not does not mean other are not as well.

Client Question: "Is there a place where I can put my money without any risk from the market?"

How can anyone sale an insurance agent is not capable of answering that question?

 

[Crabcake Johnny]

You are approaching this from the viewpoint of an ethical agent who would never put anyone in a worse position for a commission.

Let me put you on a three-way call the next time I speak with a new agent selling annuities who has been trained to grab every dime of CD or security money and put it into an annuity. I wish I could record what they're trained to say at the appointment. The short version is "if you don't put your money in this annuity you're f*cked."

Agents are still being training to tell seniors that the FDIC is broke and if they don't move their money out of their CDs they risk losing it all. It's still a rather filthy industry.

 

[0b1kanobee]

I heard through the grapevine that Carriers (at least some) are going to go the route of certification in order to offer the product. Probably something state specific. This will benefit the carrier and the state through some kind of funds (fees???) (more edumacation??) for the state probably, who knows.

All I know is I took 2 certifications already for two separate carriers and it wasn't done on a computer. I actually had to get in my car and drive somewhere, listen, take a test and pay them money. The rest is just what I heard.
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Let me put you on a three-way call the next time I speak with a new agent selling annuities who has been trained to grab every dime of CD or security money and put it into an annuity. I wish I could record what they're trained to say at the appointment. The short version is "if you don't put your money in this annuity you're f*cked.

Guess you have never been on any 3-way calls with a securities guy lol. "That annuity will never outperform inflation". "The fees within that annuity will kill ya". "Your money is tied up for years". "Have you ever seen the penalties in those contracts?" What else am I missing lol I'm having a brain fart. I have heard so many.........

 

[Crabcake Johnny]

Fees that'll kill you? Tied up for years? Penalties? So...basically they're telling the truth:-)

 

[0b1kanobee]

Fees that'll kill you? Tied up for years? Penalties? So...basically they're telling the truth:-)

You been reading that Bomboni guys posts or something?

It means that there are unethical agents, securities reps, lawyers, doctors, dentist, garbage men and Walmart employees. Everywhere there are unethical people. The more laws they make to supposedly fix the problem, the more problems they cause.

 

[scagnt83]

Fees that'll kill you? Tied up for years? Penalties? So...basically they're telling the truth:-)

There are no fees that subtract from your account with most all fixed & indexed annuities. So no, that is not the truth.

Yes its tied up for as many years as a client is comfortable with. There are 3 year products all the way to 15 year products.
With VAs there are products with no surrender charge whatsoever.
Oh, and you can always take out 10% (at least) free and clear each year (with most all products).
So thats more of a half truth/exaggeration.


Yes there are surrender penalties, but the ever popular CD has surrender penalties that are very similar to what annuities have.

Also, many stock brokers park clients in short term CDs (that they of course sell them and take commissions on) to ride out downturns or volatile times in the market, or just to round out their portfolio.
Its funny how they have no problem with the locking in of CD money (which they sell) but they do have a problem with Annuities (which they dont sell)...

 

[Norwayguy]

You are approaching this from the viewpoint of an ethical agent who would never put anyone in a worse position for a commission.

Let me put you on a three-way call the next time I speak with a new agent selling annuities who has been trained to grab every dime of CD or security money and put it into an annuity. I wish I could record what they're trained to say at the appointment. The short version is "if you don't put your money in this annuity you're f*cked."

Agents are still being training to tell seniors that the FDIC is broke and if they don't move their money out of their CDs they risk losing it all. It's still a rather filthy industry.

I can't speak for other agents....I respect you John, your like me in that you know what you know and know what you don't...I'm a complete novice when it comes to health because I really can't sell it here..You have said your not comfortable with Annuities and I can understand that.

I don't bring up FDIC or the State Guarantee Funds, I don't bring up the 860 banks on the FDIC watchlist or the 157 bank failures last year of the 17 failures in January or that of those 17 failures 2 banks went without buyers meaning anyone over the FDIC limit is screwed....Like I said I don't bring those things up because the consumer already has their skewed image about banks and Insurance Companies...Now if they ask I will educate them and show them the websites...

But how I sell annuities is on what they can do for my client. Most want a better return than a bank CD, I can help with that....Many seniors are being taxed on Social Security due to Bank interest, I can help with that. I never take 100% of their money and one of my first goals is to create an emergency fund.

 

[Crabcake Johnny]

I'm asking this as an honest question - not trying to be smug at all but can you reference where anyone lost their savings in any of the banks that went under over the FDIC limits?

And to play a bit of devil's advocate; if an agent were to go over the risk of losing money over the FDIC guarantee, I'm sure they would also go over the potential risks of an annuity if the carrier went under.