September 30, 2019
Elder Fraud Recommendations
I am a Whistleblower. My former boss has been barred from association with any FINRA member due to improper variable annuity exchange recommendations and dishonest conduct. The State of Maryland revoked his license to sell insurance products. I was his administrative assistant for seven years.
Discontinue Hypothetical Sales Illustrations - Sellers of investment and insurance products have an obligation to provide customers with information that is fair and balanced and not misleading. This is a very powerful sales tool that can lead investors in making disastrous choices. I experienced how clients were impressed with the products very high policy value after 11 to 13 years because Net Annual Return numbers were arranged to begin with a high percentage number followed by high return numbers and then low numbers from that point on. Two examples of the first 11- 13 years that clients received: (1) 20.44% 10.29% -0.61% 6.07% 18.96% -5.98% 18.68% 1.06% 3.74% -5.53% 23.97% (2) 20.42% 10.18% -0.18%5.76% 18.51% -6.38% 18.17% 0.61% 3.27% 6.02% 23.34% 10.16% 19.22% . The sales pitch showed a highlighted Policy Value at the 11th to 13th year of mostly positive growth and did not include any explanation of years if the policy or portfolio growth performs poorly. If you are selling a product with high commissions it is not in your best interest to explain losses.
Routine Examinations and Audits of Broker Dealer that Consist of Inspections Should be Conducted by an Outside Independent Firm and not by the employees of these organizations such as FINRA. This is to make certain a conflict of interest does not occur as an organization serving one interest (if failure occurs to detect compliance with industry rules and regulations) cant serve another (full disclosure and evidence during a hearing) as one loyalty can work against another.
An outside firm would be much more credible and would not be swayed by any pressure for a favorable audit or exam. If investors are going to be protected, a thorough investigation must be performed. Do not assume that all information is honest. Failure to detect fraud, question nonsensical justifications, disregarding suspicious sales practices and countless warning signs does not protect investors, especially seniors.
Simplifying Sales Materials - Customers dont understand what the annuity terms are such as guaranteed income, guaranteed principal, guaranteed return on investment, premium enhancements, fees and charges, surrender charges, living benefit options. Customers need to understand what they are purchasing with simple words and phrases.
Direct Contact with Customers from Investment and Insurance Companies - When companies deal directly with the broker-dealer and customers are not included it allows for greater opportunity for fraud. Policies should be sent directly to the customer so a broker cant edited out important documents. Information missing from an application should be requested from the customer along with the broker. When an annuity is liquidated for another annuity the customer should receive a letter directly from the existing and new contract companies that shows Mortality and Expense Fees, Administration Fees, Living Benefit Rider Fees, Up-Front Contact Bonus, Average Investment Mgmt Fees, and Surrender Charges by Year and Guaranteed Benefit Value.
Manipulating someones nest egg, especially a retiree, is unconscionable. They count on every penny of their hard –earned money being there when it is needed and should not be subjected to the greed of a person who they trusted.