The Wolf Among the Lambs - I Warned You About
Indexed Annuities
'I wouldn’t recommend them to anybody' - Alabama
Securities Commissioner
By Jeffrey D. Voudrie, CFP
April 23, 2008 - For years I’ve been warning
seniors about the dangers of equity indexed annuities. And I’ve taken
quite a bit of heat for it from those in the insurance industry. While
many agents and some readers have discounted my views, the uproar
against equity indexed annuities and the tactics used to sell them is
growing louder and louder. And now the national media has entered the
fray.
On Sunday, April 13th, 2008, Dateline NBC aired a
hidden camera investigative report titled “Tricks of the Trade” with
reporter Chris Hanson. They recorded actual insurance agents selling
equity indexed annuities to seniors, went to their seminars and even
attended training sessions for agents.
Agents might dismiss my claims when I say that
equity indexed annuities are a horrible investment, but it’s hard to
disqualify the comments of Joseph Borg, the Alabama Securities
Commissioner. When asked by Mr. Hanson if he would recommend an equity
indexed annuity to his own mother, Mr. Borg responds, “I wouldn’t. I
wouldn’t recommend them to anybody.”
Mr. Hanson also talks to the Minnesota Attorney
General Lori Swanson about the sales tactics agents use to convince
seniors to buy these investments. She says, “What is tragic about it is
when those agents go into the seniors’ homes, it is literally the wolf
among the lambs…It’s happening all around the country and it’s happening
on large scales and these insurance companies need to knock it off.”
These comments come not from other financial
advisors like myself, but from public servants entrusted to protect the
citizens of their states. And these aren’t the only public officials who
feel this way. Many states are taking action against the insurance
industry and the tactics used by agents selling these products.
One of the biggest bones of contention is the
common sales tactic of gaining credibility with the investor through the
use of deceptive credentials. Often, those selling these products are
life insurance salesmen who have little if any training, background and
experience in investing. In fact, for most it is against the law for
them to render financial advice. But isn’t that exactly what they are
doing?
Dateline showed this scheme in great detail when
they secretly attended Annuity University, a training seminar for agents
selling equity indexed annuities. They discovered, that for the right
price, an agent can make it appear they’ve written books, magazine
articles, and have been interviewed by a national radio show. You can
even have your name and face on a magazine cover that contains a large
picture of Federal Reserve Chairman Ben Bernanke.
All of this is designed to make the insurance agent
sound more qualified than they might otherwise be. And it works. Many
seniors follow the agent’s advice because of these ‘credentials’.
Minnesota Attorney General Lori Swanson is not amused with these tactics
and doesn’t pull any punches in her response. She says it’s like
“handing them [the agents] loaded guns so they can walk into the
senior’s home and rip them off.”
Ms. Swanson goes on to say that “this is part of
the marketing ploy, build trust, show you’re reputable.” Dateline
reporter Chris Hanson, who is not an agent, was able to get his own
picture and name on a magazine for $1,500. “That’s terrible, and you’ve
captured it right on tape,” responds Ms. Swanson, “what we’re hearing in
all of these cases and investigations that we’re bringing [is] that
these agents are not telling the truth.”
Speaking of not telling the truth, Dateline
captured instructors at Annuity University training agents to frighten
seniors by telling them that their money isn’t safe at the local bank,
because the FDIC is insolvent. This simply is not true and there has
never been a single instance when the FDIC has failed to pay out on a
valid claim.
Ms. Swanson also believes agents aren’t being
truthful when discussing surrender penalties with potential investors.
After viewing the typical sales pitch caught on hidden camera, she
replies, “It’s absolutely misleading. I mean really, they need to deal
with these seniors straight.”
So don’t just take my word for it. Be very careful
when considering any investment. Do your own research. Read the
contracts and the fine print. If you can’t understand it then don’t
invest.
If you have a specific question or would like more
information, give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
I will answer your financial question FREE.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive that may not have appeared in
SeniorJournal.com.
Guarding Your Wealth for Seniors, on
SeniorJournal.com, is
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to select
private clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For bookings, email
jeff@guardingyourwealth.com.
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