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A few days ago, I get an email saying one of my clients is doing a transfer. After researching her policy, I realize it is only a year old. I looked at my notes and saw that when I signed her up for payroll deduction, she also had an ING policy that she stopped contributing to. Also I checked to see what her account was earning and even though I had it allocated to a couple of different buckets, it was earning 6.75% on the last three year end deposits on the 'ending' account or 'point to point'. I thought maybe she was transferring due to poor earnings but 6.75% on all three ending deposits was not bad at all so I figured that this wasn't the problem.
I called the client and she said she met with a Valic rep (AIG) and he suggested moving this account and her old ING. The ING account was 3 years old and would carry significant surrender charges which is why I never moved it when she signed up with me. Her account with me would also carry significant surrender charges. All total, surrender charges would be close to $400.00, which she was unaware of and also was not aware that the account she was going into with him was sensitive to risk (either VA or mutual funds).
This AIG/Valic guy seems on the shady side to me. He never told her about surrender charges or her ability to lose money (according to her), which both are two things she is admittedly against upon my explanation by doing as he suggested. Even if he did, I'm not sure it would still be OK to do this.
Is this even legal? There was no reason to move the money. I was taught that when moving money like this, there had to be a reason to do it such as it has to be better for the client. Maybe going from fixed accounts to securities is better for some folks but she doesn't want that and also we have the surrender charges to throw into the equation. Doesn't seem ethical to me and perhaps just flat out wrong in the eyes of FDOI.
I called the client and she said she met with a Valic rep (AIG) and he suggested moving this account and her old ING. The ING account was 3 years old and would carry significant surrender charges which is why I never moved it when she signed up with me. Her account with me would also carry significant surrender charges. All total, surrender charges would be close to $400.00, which she was unaware of and also was not aware that the account she was going into with him was sensitive to risk (either VA or mutual funds).
This AIG/Valic guy seems on the shady side to me. He never told her about surrender charges or her ability to lose money (according to her), which both are two things she is admittedly against upon my explanation by doing as he suggested. Even if he did, I'm not sure it would still be OK to do this.
Is this even legal? There was no reason to move the money. I was taught that when moving money like this, there had to be a reason to do it such as it has to be better for the client. Maybe going from fixed accounts to securities is better for some folks but she doesn't want that and also we have the surrender charges to throw into the equation. Doesn't seem ethical to me and perhaps just flat out wrong in the eyes of FDOI.
