I have a prospect who has come to me to help him with his brokerage account. He is with Merrill Lynch and one part of his holdings is in an AXA Equitable variable annuity. The client is telling me that he and the broker discussed it, but that he was not sold on it, and then a few days later the contract shows up in the mail. It is in the client and his wife's names, but neither signed the contract. The Merrill branch manager is telling him that since he and the broker discussed the annuity, he did not need to sign the contract. I am assuming the broker has discretion, the client is unsure about that.
But, wouldn't the client and his wife have to sign the annuity contract for it to be valid? I am going to talk with our compliance people Monday and get their input on how to have him pursue this.
THe broker can have that type of descretion.
But to be honest most of these insurance companies fold at the first sign of trouble (from a client) and should let him out of the contract no problem, I see it all to often now.
Better than talking about "bottoming out of $", sticking the money into Forex and end up losing it all - I actually saw a statement. I've never been an RIA/IAR but I had heard RIA VA policies didn't allow any guaranteed living benefits. Ask to review the policy. Managed accounts are so easy to replace if you come across one.
The client has been in the annuity for about 1 year, so he is past his free look. The client called the State Department of Insurance, they suggested writing AXA a letter. He is going to send Merrill a copy.
My compliance people are telling me that we would never accept the annuity contract without signatures, even with discretion authority. I guess I don't understand how Merrill would allow a broker to put a client into a 10 year contract solely based on that discretion authority. What other types of contracts would they allow the brokers to put clients in?
This is a suitable product for the client, but it was poorly explained why it is suitable, and exactly how it works. He has made up his mind that he wants out.
This is starting to sound like one of the stories of when a person suddenly "forgets" about why they are in an investment or insurance product when it meets their needs. Yet another example of why it is so important to document. Remember, you're only hearing one side of the story. His broker might have a whole file documenting how he advised the client all about the product, and the client agreeing to it.
Sometimes it is best not to get involved, especialy if you are saying that it is a suitable investment. I am not saying this is one of them only you know the specifics, but I would think about it long and hard.
If he never wanted the investment and never signed delivery paperwork for the annuity he can still free look it. It's up to the Broker to produce proof of delivery paperwork and if it doesn't exist it can be done.
I know someone who was at an agency where a rep who left advised all his clients to free look annuity contracts that never had complteted delivery paperwork signed and maintained (the annuity company said they weren't needed and no one took issue with this). I know a few companies that still don't require delivery paperwork, I still document delivery of a policy.
These are after all still insurance products.
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If you want to be rich you must follow one simple rule...do what rich people do.
If the client didn't want the annuity and it was purchased without his knowledge -it is not suitable. Suitability is not limited to income and assets - it also has to be suitable to the clients wishes and investment philosophy.
That said - how come the client didn't send it back right away if he didn't want it?
Lastly - if he has had it a year, there may be a very large gain in the policy - can he surrender it and come out ahead?
Talking about agents making blunders without client knowledge .. I happened to come across an Axa/Eq contract last year (a portfolio review of sorts) .. Contribution was over seven figures (a retired surgeon) .. Client insisted that it had 6% GMIB in it .. I couldn't find the clause anywhere in the contract so suggested we meet with the agent and also suggested that he take a voice recorder with him (which he used with the agent's consent) .. as the AXA agent shuffled through the original app, I saw her face start turning white then black .. turned out she forgot to check one box and as a consequence the contract had no GMIB in it and it was down over 40% from the initial contribution .. in the end the client got his GMIB rider reinstated and the agent had to come up with the majority of the difference out of her own pocket .. which was a lot of friggin money ..
Talking about agents making blunders without client knowledge .. I happened to come across an Axa/Eq contract last year (a portfolio review of sorts) .. Contribution was over seven figures (a retired surgeon) .. Client insisted that it had 6% GMIB in it .. I couldn't find the clause anywhere in the contract so suggested we meet with the agent and also suggested that he take a voice recorder with him (which he used with the agent's consent) .. as the AXA agent shuffled through the original app, I saw her face start turning white then black .. turned out she forgot to check one box and as a consequence the contract had no GMIB in it and it was down over 40% from the initial contribution .. in the end the client got his GMIB rider reinstated and the agent had to come up with the majority of the difference out of her own pocket .. which was a lot of friggin money ..
WOW... The agent paid the client money back....you sure about that statement????
WOW... The agent paid the client money back....you sure about that statement????
Yes and that's why I told him to record the conversation because there was nothing written anywhere to prove that she actually meant to sell the GMIB. With the recording in place, the carrier would have settled with the client anyways. All I heard from the client was "she took care of it with her own money" without all the gory details.
Under what circumstances do you think that could ever be possible?
Not to mention if he did somehow find himself ahead do you really think we would be having this discussion.
Renard, unless you have been living under a rock this past year, you would know that the market has been up dramatically (about 30% over the last 12 months and 50% over the last 8 months). Depending on the type of annuity, the gain could be sizable, even taking into consideration surrender charges.
We might be having this discussion under the circumstances because the original post was about whether or not the broker could do this sort of transaction. And since people like you did not know it was even possible to have a large gain on an annuity in one year, we might also be having this discussion.
Nice try though. If you have something to contribute - do so. If you want to insult other posters, at least demonstrate basic knowledge when you do so.
Renard, unless you have been living under a rock this past year, you would know that the market has been up dramatically (about 30% over the last 12 months and 50% over the last 8 months). Depending on the type of annuity, the gain could be sizable, even taking into consideration surrender charges.
We might be having this discussion under the circumstances because the original post was about whether or not the broker could do this sort of transaction. And since people like you did not know it was even possible to have a large gain on an annuity in one year, we might also be having this discussion.
Nice try though. If you have something to contribute - do so. If you want to insult other posters, at least demonstrate basic knowledge when you do so.
Actually I will stick by my statement, THE fact is if their were large gains that would off set his surrender charges, and fee's and expenses we wouldnt be discussing "free look" options because at that point he would just surrender and move on.
And actually since I do have a good understanding on annuities is why I said that.
I actually sell them and since I have real world experience with them is why I asked.
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