Annuity Scams: What Dishonest Agents Do
Dishonest annuity agents will stop at nothing to sell you their products. They will put you through high-pressure sales meetings, tempt you with signing bonuses and push you into today-only offers. They’ll use the simplest of terms to describe difficult-to-understand annuity contracts so you don’t know what you’re really getting into. And, if you ask about penalties and withdrawal fees, they’ll downplay play them like they’ll never apply to your situation.
At the end of the day, a dishonest annuity agent will convince you to buy a completely unsuitable investment that costs you hundreds of thousands of dollars, but at the time you make the purchase, you’ll feel like it’s the opportunity of a lifetime.
Signs You’re Dealing with a Dishonest Annuity Agent
At the Consumer Investor Resource Center, we’ve seen all the tricks used by dishonest annuity agents, who use their charismatic personalities to build a false sense of trust and confidence in their victims. No matter how nice, trustworthy and friendly your agent appears, keep your wits about you.
Watch out for the following red flags of annuity scams, and if you encounter one of them, run the other way as fast as you can.
Fake titles and fake certifications
It’s not uncommon for an agent to claim that he or she is a registered agent, when in fact the agent is not qualified to sell you investments. Do not work with an agent who is working as the assistant of someone else. Also, be careful of agents who are only selling hot air and just want to steal your money. These “fake agents” might call themselves paralegals, estate planners, trust advisors, senior planners or certified senior adult consultants. Don’t be fooled by made up titles like this. Always demand proof of certification and verify that proof independently.
Not a FINRA-registered agent
Your agent should be a FINRA-registered agent. Ask your annuity agent to give you his or her FINRA (Financial Industry Regulatory Authority) CRD number and only deal with these kinds of agents. If a FINRA-registered agent defrauds you, you’ll have an easier time holding him or her liable. Finally, look up his or her CRD history via FINRA’s BrokerCheck website. (https://brokercheck.finra.org/) to thoroughly check the agent’s background.
If you risk dealing with a non-FINRA certified agent, make sure that your agent is certified with another credible authority. Also, independently verify his or her titles and qualifications. Double check that the certifications are valid and current by contacting the certification authority that issued them.
Sending Money to an individual or a P.O. box
An honest agent will always have you send your investment money to the insurance company that is issuing your annuity. A dishonest agent might ask you to make a check out to a person or another agency or to send your funds to a P.O. box. If this happens, it’s a red flag that you might be dealing with fraudsters. Look into the matter further before sending your money.
Fraudulent expiration notices
Fraudsters may send you a false notice that your annuity is about to expire and you need to act now. This is almost never the case because the typical annuity does not expire until the investor reaches the age of 115.
Promises of not losing any money
If your agent tells you that you won’t lose any money in your annuity, guaranteed, it should be an immediate red flag. It’s possible they’re trying to pull the wool over your eyes and they haven’t given you the full picture of the investment. In these cases, determine if you’re buying a “fixed annuity” or a “variable annuity.” Fixed annuities do have a guaranteed payout. However, variable annuities will go up and down in value according to current economic conditions.
Getting caught up in a “trust mill”
Sometimes an annuity agent will recommend a revocable living trust as if he or she can actually set one up for you. Once the trust is set up, the annuity agent will then sell your annuity to put inside the trust. This might be a good financial strategy for some people. However, a trust requires a lawyer’s assistance and – unless your annuity agent is also a licensed attorney – your agent will only serve as a middleman. Creating your trust through a middleman will be more expensive in the long run. If you want a revocable living trust, go to a trust planning lawyer directly and don’t fall prey to a trust mill.
The Consumer Investor Resource is Available to Help You
The above red flags are only a short list of the most common tricks and scams used by dishonest annuity salespeople. If you have the slightest suspicion about your annuity, contact the Consumer Investor Resource Center today. We’ll get to the bottom of what happened so you can have peace of mind.