Sunday, July 8, 2007

New York Times Article On Annuities

Whether or not you like the New York Times, this article on seniors being ripped off made the business section. It is important to know the type of information the public is getting regarding designations, annuities, and financial advisors in general. After reading, please post your comments.-TD

From the New York Times:

...Deferred annuities, however, offer sales agents the richest commissions, which is one reason so many of them are sold every year, regulators say. Selling a $100,000 deferred annuity, for example, typically earns a sales representative $9,000, though buyers are prohibited from touching much of their money for 10 years. Annuities with shorter tie-ups carry much smaller commissions.

“An annuity that pays a fixed immediate income offers seniors a lot of security,” said Jean Setzfand, director of financial security with AARP, formerly known as the American Association of Retired Persons. “But a deferred annuity is almost always a bad idea for a retiree.”

Those concerns, however, have not stopped many insurance agents from aggressively selling deferred annuities.

Some of those agents have been trained by organizations that require only a few days of classroom instruction.

For instance, the 1,200 people who have enrolled in the certified retirement financial adviser program spent only four days in a classroom, according to a spokesman. The president of that program, Larry Klein, was fined $150,000 in the mid-1990s by securities regulators after persuading an 83-year-old blind woman to speculate on New Zealand’s currency.

Mr. Klein, in an e-mail message, said the charges against him were untrue and that it was “idiotic” to assess a course based on its duration.

1 comment:

Brian , Texas said...

When you think about the number of bad agents out there that we all run into. It is amazing the New York times could only find a couple to write about.