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Jul 13, 2016 by |

San Francisco Annuity Fraud Attorney: Fee-Based Annuities


The New Landscape of Fee-Based Annuities

As the Department of Labor’s new rule comes into effect, requiring insurance and annuity salespeople to act as fiduciaries, financial companies are scrambling to adapt. One way that some companies are trying to deal with this change is to find a loophole in the rule, by switching to ‘fee-based’ instead of ‘commission-based’ policies, where a broker can avoid having a fiduciary duty by receiving payment in the form of a monthly cost to the policyholder rather than a percentage of the total contract.

This system is designed to eliminate the risk of brokers focusing on making a big sale that may be detrimental to their client, and instead to make it more profitable to build long-term relationships with the people to whom they sell their products. Instead of capitalizing on a short-term profit from misleading seniors, brokers will have to carefully guide and manage their client’s investments in order to make a profit.

However, since the move is designed to free brokers from a legal fiduciary duty, it remains to be seen how committed the industry is to making a serious effort to advise and support seniors. While increased regulation can help prevent abuse by brokers and insurance companies, it is inevitable that once the pressure is off, new tricks and schemes will appear to replace the old ones. Annuity sales amount to billions of dollars of revenue for these companies every year, and without ongoing monitoring, companies will continue to put profit ahead of the wellbeing of their customers.

Our San Francisco Annuity Fraud attorneys advise that seniors and retirees remain alert when investing in annuities and life-insurance products, many of which are sufficiently complicated that the brokers themselves may not fully understand them. Before investing substantial sums of money, talk to your broker to make sure that they understand your financial situation, your long term needs, and how a product will fit into your plan.

Some of the major annuity and life insurance providers are:

If you or a loved one has been the victim of an improperly sold or administered annuity, contact the Evans Law Firm at (415) 441-8669, or by email at Our San Francisco annuity fraud attorneys have experience dealing with variable, fixed, indexed, and other types of annuities, and can help guide clients through litigation or toward an equitable settlement.

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