Monday, December 17, 2007

Variable Annuities: Are They Ever OK To Sell?- One Attorney Says "Yes!"

(editor's note: Katherine Vessenes and her husband Peter teach advisors how to break down barriers and achieve the practices of which they have always dreamed. For more on their unique comprehensive workshop, visit:( )

FAN readers get $250 off the registration fee if they contact me at 888-571-8383 or email: for more information and a brochure.)

By Katherine Vessenes, JD, CFP®

The problem:

There is going to be trouble in boomer retirement-land. Big trouble and a lot of firms haven’t figured it out yet.

How do I know? I have the best job in the world—I help protect our clients from the pain of an investor lawsuit or complaint. Our clients are wholesalers, financial advisors, broker/dealers and insurance companies who all want to do the right thing for the investor and raise profits at the same time.

So I am on a mission—I want financial advisors and corporate execs to be able to sleep at night knowing their investors are happy, in great products and the companies they recommend are solid and secure. I don’t want any lawsuits, complaints, or worse: criminal prosecutions, on my watch.

Here is the situation: Baby boomers are woefully ill prepared for retirement. Based on numerous statistics I have seen over the years—it wouldn’t surprise me if 50% of them had the unthinkable happen to them—run out of money in retirement. Could be more.

Baby boomers have their heads in the sand when it comes to retirement. Two thirds of Americans believe they will have the same life style in retirement as they do now, even though less than 42 have ever bothered to even calculate their retirement needs, says a study by EBRI. The US Department of Commerce reports the average savings rate is now close to a -1.7% and the average savings for retirement is a pitiful $50,000.

According to Price and Associates 80% of top executives who are making between $500,000 and a million dollars a year in income (not net worth!) are worried about running out of money in retirement—and with good cause, it is likely to happen at all levels of society.

To compound the situation, boomers will have a longer retirement than any other generation. Some think it could be as long as 30 years! They might even be retired longer than they actually worked.

So let’s connect the dots: Baby boomers are likely to run out of money in retirement. It is going to be a big surprise to them. Investors hate surprises. Unhappy investors, particularly surprised and unhappy investors, run to their attorney’s office...
(rest of story at:


Todd V said...

Tammy, Tammy, Tammy...

You're baiting me, aren't you???

Is there a 'crisis' approaching for baby-boomers?? Sure. Is an annuity the magic bullet? Maybe and maybe not...

Since it's Christmas, I'll give you a gift and stop there ;-)

Anonymous said...


You caught me! Really, I can't get anything past you.

Baiting? No.... Trying to stir up some controversy and get these readers to speak up- YES!

I knew this would get your blood stirred, but was hoping some of your fellow advisors might chime in.

I will say, however, that, from a pure litigation standpoint, KV might make some sense.

Todd V said...


I don't disagree that, from a litigation standpoint, there are things that we could and should do to protect ourselves when selling VAs (or any other product, for that matter)...

Wanna know what I think the best litigation insurance is?? Don't do things that will get you sued! Pass everything through the "Wall Street Journal Test"... If you wouldn't want what you are doing plastered on the front page of the WSJ, you probably shouldn't be doing it!

By the way... How about doing a short article on the benefits of AAA rated, GSE bonds (especially ones like the Federal Home Loan Bank that are state tax free)... Just a few days ago, I was able to purchase a bunch of these with yields in the 6.3% range (callable in 12/08)... State tax free and a 6.3% yield... Now, that's a good thing ;-)!