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Robert W Pearce's  Instablog

Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • VARIABLE ANNUITIES LISTED AMONG FINRA'S NATIONWIDE DISCIPLINARY ACTIONS 0 comments
    Jan 4, 2013 12:37 PM

    The Financial Industry Regulatory Authority (FINRA) recently reported that it will focus its attention on examining products that are held out to outperform the market. According to FINRA, the economic environment that many investors have faced since 2008 has fostered an increase in appetite for high yield investments given the low yield in Treasuries. It has also fostered fraud, misappropriation, illegal sales practices, and unsuitable recommendations by brokers. Some of the products FINRA will be focusing on are: variable annuities, non-traded real estate investment trusts, municipal offerings, leveraged exchange traded funds, mortgage-backed securities, private placements, structured products, and life settlements. FINRA will also look into fee schemes since it is concerned that broker-dealers are charging their clients hidden, mislabeled, or excessive fees. Several cases have already been filed by FINRA against firms who have been taking advantage of their clients through fees.

    An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. Variable annuities do not guarantee principal protection, so investors can lose money if markets deteriorate.

    With respect to variable annuity costs, an agent can collect at least 5% from the moment of sale and 0.5% or more every year for the life of the investment; variable annuities with common riders can take over 3% off annual returns. Surrender charges of as much as 9% may apply if an investor is in need of cash due to an unexpected emergency. Also, insurance companies are offering Guaranteed Lifetime Withdrawal Benefits (GLWB) without clearly telling investors the costs associated with taking early distributions. GLWBs allow percentage withdrawals based on the total amount without having to annuitize the investment. The problem with GLWBs is the immense cost of withdrawal, which is hidden away from investors in the terms of the agreement.

    Have you suffered a loss of principal in your variable annuity? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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