Ohio National broker pitched VA trades as 'infinite banking' per FINRA

[scagnt83]

That annuity is the Athene Agility 10 contract. Why that one? 10% free withdrawal based on the initial contract value, not the anniversary value. So I can predict and plan the withdrawal each year for 10 years.

So the point of the annuity, is to deplete it completely over a 10 year period?

If so, why not use an annuity that is accumulation focused instead of income focused? (since income does not kick in until y11 for that product)

That product uses reduced rates to account for the 20% Income Base Bonus, and the "no-fee" Income Rider.

Does that feature of free withdrawals on the premium really make that large a difference when compared to better performing products?

 

[Tahoe Ray]

If so, why not use an annuity that is accumulation focused instead of income focused? (since income does not kick in until y11 for that product)

Because almost all other products have their 10% free out based on accumulation value, not the initial deposit.

 

[DHK]

So the point of the annuity, is to deplete it completely over a 10 year period?

If so, why not use an annuity that is accumulation focused instead of income focused? (since income does not kick in until y11 for that product)

That product uses reduced rates to account for the 20% Income Base Bonus, and the "no-fee" Income Rider.

Does that feature of free withdrawals on the premium really make that large a difference when compared to better performing products?

The 10% free withdrawal is the only reason why it works. Remember, I'm in California - the land of arresting annuity agents. I want NO product that can incur surrender charges based on the plan being implemented.

The purpose is principal protection and capital transfers, not accumulation.

 

[DHK]

I made the caveat (without the surrender fees), and using an IA instead of a VA.

I understand.

Just because I'm doing it doesn't mean everyone in TBL is.

 

[Allen Trent]

Some technicalities here.

First, this broker moved the money from 401(k) to a variable annuity. That's done all the time - we know that.

I initially thought that, assuming there was a modicum of care and concern for the client, that this was the way to move money from the VA to the WL.

I was wrong.

Let me quote the scenarios of the 2nd link I had posted:





There was NO standard of care or consideration for the client's financial well-being, based on these two stories. (There are more, but these make the point.)

When *I* am doing my cases, yes, we can move money from a 401(k) to a FIA. I chose the one that I wanted to fund a WL over a 10-year period. That annuity is the Athene Agility 10 contract. Why that one? 10% free withdrawal based on the initial contract value, not the anniversary value. So I can predict and plan the withdrawal each year for 10 years.

I don't see ANY kind of suitability or recommendation review standard at ALL.

If he was in California, he would've been arrested. Period.

Those examples are beyond disgusting. Not only were the clients not candidates for such a strategy based on the background, it is literally theft by the rep in such a malicious strategy that was never sustainable for the client. Reminds me of some of the most abusive & disgusting College planning or Home equity harvesting cases that were destined to fail at the inception based on client income/assets

Commission Needs Analysis was the standard of care

 

[DHK]

The part that kills me... and I mean this... it kills me that he was a super-producer doing 800-1200 applications per YEAR.

I have heard him speak. He spoke about the fundamentals of this business. He encouraged doing the right thing. I believe that he did exactly that for the majority of his career.

I don't know what changed. I don't know how you can be in this business for over 20 years... and have THIS kind of issue?

Anyone can look up his brokercheck record.
- In 97, he had an issue that he was remorseful about (signing a client's signature) and he was let go from that particular firm.
- In 08, a customer dispute was denied.
- In 2016, began all the settlements of disputes.

Now, I do believe that there CAN be a point in time that one cannot avoid getting a complaint. The longer we're in this business, it can be inevitable. I get that.

But these were acts of commission (not just earnings) but willfully done.

Makes me wonder what changed? What happened?

If you watch this podcast with Caleb Guilliams, you wouldn't believe that he was malicious in working with (some of) his clients.

 

[DHK]

 

[scagnt83]

The part that kills me... and I mean this... it kills me that he was a super-producer doing 800-1200 applications per YEAR.

Since each client had 2 applications, we are talking 600 clients per year. With 261 working days per year, that is 3 apps a day.

Considering all the things the agent must do themselves on an advanced case like that, that is a heck of a lot of supposed time spent working. Bordering on the physically impossible if you have any kind of a life outside of selling insurance.

No way a single agent (I dont care what staff they have) can provide a true standard of care to that many clients in a year if they are doing a true financial plan and income plan for them and actually taking the time to fully explain it.

 

[DHK]

He had a team. You apparently never heard of him before. He had a team of 10-12 people at any given time to help process all this business... doing 22 case files a week.

 

[DHK]

No way a single agent (I dont care what staff they have) can provide a true standard of care to that many clients in a year if they are doing a true financial plan and income plan for them and actually taking the time to fully explain it.

You probably never heard how Wayne Cotton did it either. He had 2 salaried CLUs that helped to pre-screen his prospects to see who should see him and who they should just handle.

Wayne had all the case file notes on one page.

Just because you don't see it doesn't mean it cannot be done.