New Florida Annuity Fraud Law

[mickeyd]

Not sure how much the CE class will help, but the $30k fine should get their attention.

As part of the new law, agents licensed in Florida must take a minimum of three hours of continuing education on the subject of suitability in annuity and life insurance transactions. It also imposes fine maximums of $30,000 for each "willful violation of twisting, churning and submission of fraudulent signatures."

Florida's Tougher Annuity Fraud Laws Take Effect this Year - Articles - Financial Planning=

 

[ziggy29]

"Suitability." That's the key word. So many people are sold these things that don't need them and for whom they aren't appropriate. In reality, for brokers and salesmen who push these things, there should be some fiduciary duty to the client, IMO.

And the other thing is that there should be more transparency and disclosure about the fees and commissions being charged on many of them.

Unfortunately, these people have given even legitimate annuities such a bad name that even some people who might benefit from an appropriate low-cost annuity stay away.

 

[FinanceDude]

"Suitability." That's the key word. So many people are sold these things that don't need them and for whom they aren't appropriate. In reality, for brokers and salesmen who push these things, there should be some fiduciary duty to the client, IMO.

There IS a fiduciary duty to the client, but many firms, particularly insurance firms, that duty is overlooked.

And the other thing is that there should be more transparency and disclosure about the fees and commissions being charged on many of them.

The lobbyists are paid to see that doesn't happen........

 

[haha]

There IS a fiduciary duty to the client, but many firms, particularly insurance firms, that duty is overlooked.



The lobbyists are paid to see that doesn't happen........

Transparency is public enemy #1 to vendors. For a counter example, our modern high quality discount brokers are really the eighth wonder of the world.

Ha

 

[FinanceDude]

For a counter example, our modern high quality discount brokers are really the eighth wonder of the world.

Yes, and no. It is easy to do business with them, but recourse is non-existent. I lost track of the number of folks who tried to sue Ameritrade and Etrade for poor or non-execution of trades in the tech meltdown. Few if any got any recourse. It's pretty easy to set up a discount broker. Our firm's average trade is $29.00, more than the $7 or $10, but not obscene........

 

[haha]

Yes, and no. It is easy to do business with them, but recourse is non-existent. I lost track of the number of folks who tried to sue Ameritrade and Etrade for poor or non-execution of trades in the tech meltdown. Few if any got any recourse. It's pretty easy to set up a discount broker. Our firm's average trade is $29.00, more than the $7 or $10, but not obscene........

Well, no way am I criticizing your business model, or trying to name the only high class financial businesses that exist.

However, in over 30 years with my discount broker thay have maybe messed up twice, and each time they made it good.

They are less good on very stressed days, as the site may go down, and at these times they are close to impossible to get on the phone.

Ha

 

[FinanceDude]

Well, no way am I criticizing your business model, or trying to name the only high class financial businesses that exist.

However, In over 30 years with my discount broker thay have maybe messed up twice, and each time they made it good.

They are less good on very stressed days, as the site may go down, and at these times they are close to impossible to get on the phone.

Ha

Agreed, they still have a lot of problems on volatile days........

 

[saluki9]

Transparency is public enemy #1 to vendors. For a counter example, our modern high quality discount brokers are really the eighth wonder of the world.

Ha

Until of course you start to consider...

1. Their continued acceptance of poorly disclosed payoffs for shelf space of their "preferred" lists of mutual funds.

2. Their "fuzzy" (to be kind) prices on their bond inventories which often had rediculous markups.

3. That for years they many of them (and some still do) routed their customer orders to second and third tier exchanges and ETNs to make up for their low commissions

 

[ERD50]

Until of course you start to consider...

3. That for years they many of them (and some still do) routed their customer orders to second and third tier exchanges and ETNs to make up for their low commissions

Does this result in a transaction outside the bid-ask seen on the screen?

I almost always place limit orders, just to avoid surprises. It is pretty rare for me to see a slow or no fill when it appears that the order should hit (though I don't usually monitor a level 2 quote, so maybe some big orders were ahead of me).

Also, the one thing that impresses me is how often my limit order is filled at a price that is *better* than my limit order (price has moved in the seconds it took me to place the order). It seems to me it would be pretty easy to fill that at my price with something they just picked up at the better price, and I'd just assume it was a few second delay or entry order or something.

-ERD50

 

[FinanceDude]

Until of course you start to consider...

1. Their continued acceptance of poorly disclosed payoffs for shelf space of their "preferred" lists of mutual funds.

2. Their "fuzzy" (to be kind) prices on their bond inventories which often had rediculous markups.

3. That for years they many of them (and some still do) routed their customer orders to second and third tier exchanges and ETNs to make up for their low commissions

yeah, but at least their trade execution prices are cheap......

 

[saluki9]

Does this result in a transaction outside the bid-ask seen on the screen?

I almost always place limit orders, just to avoid surprises. It is pretty rare for me to see a slow or no fill when it appears that the order should hit (though I don't usually monitor a level 2 quote, so maybe some big orders were ahead of me).

Also, the one thing that impresses me is how often my limit order is filled at a price that is *better* than my limit order (price has moved in the seconds it took me to place the order). It seems to me it would be pretty easy to fill that at my price with something they just picked up at the better price, and I'd just assume it was a few second delay or entry order or something.

-ERD50

No, it is built into the spreads which may be higher than the market depending on where they execute them.

What you might be seeing when your limits are filled at a better price than is exactly what you were thinking, a cross trade.

Where this gets really bad is in the FI market. I was buying a bond for a client the other day and I checked 3 dealers as we usually do. The price difference between the high and low dealers was 5%. The highest price was from one of America's favorite discount brokers who it seems just didn't want to mark down their inventory.

 

[haha]

Until of course you start to consider...

1. Their continued acceptance of poorly disclosed payoffs for shelf space of their "preferred" lists of mutual funds.

2. Their "fuzzy" (to be kind) prices on their bond inventories which often had rediculous markups.

3. That for years they many of them (and some still do) routed their customer orders to second and third tier exchanges and ETNs to make up for their low commissions

Well, 1 and 2 do not apply to my broker, or at least to my useage, as I don't care what their preferred list of mutual funds is.

Anyway, I am sure your firm is much, much better. Still, the discount brokers seem to have found a small niche.

Ha

 

[saluki9]

Well, 1 and 2 do not apply to my broker, or at least to my useage, as I don't care what their preferred list of mutual funds is.

Anyway, I am sure your firm is much, much better. Still, the discount brokers seem to have found a small niche.

Ha

Our firm holds 100% of our accounts with two of the largest discount brokers (Schwab and Fidelity). People should just be aware of the hidden ways they make money

 

[Freddy]

Transparency is public enemy #1 to vendors. For a counter example, our modern high quality discount brokers are really the eighth wonder of the world.

Ha

I agree discount brokers are a huge help for investors, however the majority of do-it-yourselfers got killed in 2008. It do not matter which asset class was used. The median loss was probably 35-40%.

A decent financial planner or annuity salesman, if they sold a decent equity index annuity or fixed annuity lost their client zero money. I am not talking variable annuities which I would avoid at all costs.

Annuities are far from perfect but a decent planner can get a retiree or near retiree in shape to be able to probably retire. Do it yourselfer generally have no clue on the implication of taxes, bear markets losses and other issues. The news is littered with stories each day of sophisticated senoir investors who were hammered in 2008.

Financial publications like Money and Smart Money bash annuities while praising mutual funds. Why? All the biggest advertisers are mutual fund companies.

Investors who were dumb enough to hold actively managed MF in non-retirement accounts avged losses of 30 to 40% plus will probably also pay capital gains taxes even though they lost money! Never saw this in an annuity. Bankers selling CD's yielding 3% are allowing their customers to fall behind inflation of 5 to 7% (the real inflation rate). Why are the mutual fund companies, discount brokers who flog MFs or bankers not facing fines and jail time? How about the magazine flogging MF?

Many investors would do far better in universal life insurance which had equity indexes, no downside, death benefits, tax-free withdrawl at retirement plus returns that can average 8%. Money and Smart Moeny will never mention that and will bash insurance because they run no ads in their magazines.

 

[Nords]

A decent financial planner or annuity salesman, if they sold a decent equity index annuity or fixed annuity lost their client zero money.
Annuities are far from perfect but a decent planner can get a retiree or near retiree in shape to be able to probably retire. Do it yourselfer generally have no clue on the implication of taxes, bear markets losses and other issues. The news is littered with stories each day of sophisticated senoir investors who were hammered in 2008.
Many investors would do far better in universal life insurance which had equity indexes, no downside, death benefits, tax-free withdrawl at retirement plus returns that can average 8%.

Welcome to the board, Freddy. I think.

In a most general sense similar to the one you're using, it's usually not a good thing when a member's debut post defends the subjects you've chosen to promote. It tends to make the other posters wonder about your background and your agenda. Of course I'd welcome your subsequent introductory posts which would no doubt prove me wrong. But I'm skeptical.

As for DIY investors who pursue retirement without benefit of planners while lacking in universal life insurance-- have you considered the demographics of this board? Do you expect a rousing chorus of consensus regarding your statements? Just curious...

 

[ERD50]

Originally Posted by haha
Transparency is public enemy #1 to vendors. For a counter example, our modern high quality discount brokers are really the eighth wonder of the world.

Ha

I agree discount brokers are a huge help for investors, however the majority of do-it-yourselfers got killed in 2008.

Freddy, do you understand the difference between "transparency" and "volatility"?

-ERD50

 

[haha]

Freddy is no doubt in the business. But he isn't linking to his site, why shouldn't he be allowed to post his opinion?

I am not at all sure that he isn't right for many people.

What is the rule about who gets to openly hype their books, goods and services in their posts?

Must one buy a certain amount of advertising to get a pass

Ha

 

[REWahoo]

What is the rule about who gets to openly hype their books, goods and services in their posts?

Must one buy a certain amount of advertising to get a pass

No open hyping of books, goods or services (spam) is permitted in forum posts or sig lines. Forum members who are long-term contributors may be given a little more leeway to mention something in context of a subject being discussed, but only if those mentions are few and far between.

 

[M Paquette]

I agree discount brokers are a huge help for investors, however the majority of do-it-yourselfers got killed in 2008. It do not matter which asset class was used. The median loss was probably 35-40%.

Hi, Freddie. Welcome to the Early Retirement Board.

We had a survey a few weeks ago on losses in the current market fluctuation. The median came in around 20%, which, given portfolios split between equities and fixed income, was actually pretty reasonable.

Many investors would do far better in universal life insurance which had equity indexes, no downside, death benefits, tax-free withdrawl at retirement plus returns that can average 8%. Money and Smart Moeny will never mention that and will bash insurance because they run no ads in their magazines.

"can average" And after loads, commissions, sub-account expenses, and account expenses and fees? Returns may be somewhat less.

Gains, if any, withdrawn from the account are taxed as ordinary income and do not receive favorable capital gains treatment.

Borrowing against the policy avoids immediate taxes, but there may be additional fees, and once you start to borrow against a policy you must keep it in force. Should the policy lapse, all the earnings borrowed become immediately taxable.

A more reasonable investment for the long term would be low cost tax managed funds and index funds. Gains on these are taxed at long term capital gains rates, maxing out at 15%. Distributions are kept small, much smaller than from actively managed funds.

For an immediate and reliable income stream, you could consider a single payment immediate annuity from a low cost provider. Don't go over the state guaranty funds limit for any annuity with any one company, usually $100K.

 

[Freddy]

Hi, Freddie. Welcome to the Early Retirement Board.

We had a survey a few weeks ago on losses in the current market fluctuation. The median came in around 20%, which, given portfolios split between equities and fixed income, was actually pretty reasonable.




"can average" And after loads, commissions, sub-account expenses, and account expenses and fees? Returns may be somewhat less.

Gains, if any, withdrawn from the account are taxed as ordinary income and do not receive favorable capital gains treatment.

Borrowing against the policy avoids immediate taxes, but there may be additional fees, and once you start to borrow against a policy you must keep it in force. Should the policy lapse, all the earnings borrowed become immediately taxable.

A more reasonable investment for the long term would be low cost tax managed funds and index funds. Gains on these are taxed at long term capital gains rates, maxing out at 15%. Distributions are kept small, much smaller than from actively managed funds.

For an immediate and reliable income stream, you could consider a single payment immediate annuity from a low cost provider. Don't go over the state guaranty funds limit for any annuity with any one company, usually $100K.

A more thoughtful post and i appreciate the tone of discussing these topics. Some people here have said I have an agenda and i should not start a post taking these issues on. Sorry but this is the United States and we still have the First Amendment. I saw nothing on the board saying it was moderated to limit discussion of topics. I know the secs and insurance side and just trying to bring some balance.

Someone mentioned the avg loss for people posting here or seniors was an avg loss of 20% which is not that bad but not that good and sounds low. No one can deny if you used John Bogle's buy and hold the S&P 500 for the past 12 years you made no money. Ditto for the Dow 30.

UIL's have a fix number of payments in during usually over 5 years. If set up properly they are very tax effecient plus include a death benefit. I know both sides of the street very well. I know the secs and annuity/insurance side. Are they both ideal? No way. The secs side really let small investors down in a BIG way with massive hedge fund manipulation of the financial markets. After what the hedge funds were allowed to do with naked shorting, buying credit default swaps, spreading rumors, Madoff, etc. I have little faith in the SEC. If I had to trust the SEC or state insurance comissioners - I trust the states.

For an older person DIY in mutual funds etc versus a good planner with some good EIAs plus fixed annuities plus some managed funds & maybe some bonds - I would go the with annuities.

No load index funds or ETFs? Most got smashed last year. There are some simple things retirees could have done using technical analysis to have avoided the meltdown but did their broker tell them or Vanguard or Money or Smart Money? No.

Investors have been told the 10% a year long term for stocks (S&P 500) is the normal but over the long-term after expenses it is probably closer to 6%. This is going back to 1928.

I have no agenda. Just do your homework. Do not buy into the Money and Smart Money mutual fund kool aide. Yes it can work but can anyone here deny that over the last 12 years people in the stock indexes made nothing. A fixed annuity at 6% would have been a better way to go. High yield stocks like oil sands and oil shipping was better but the stocks are volatile. If people are really shrap - the best strategy was probably buying covered calls - but you have to really know what you are doing.

Warren Buffet value buying? Well we saw that with that famous fund manager Bill something. He loaded up on Citicorp, Bank America, etc.

One piece of advice for seniors is unless you really know what you are doing - do not own stocks especially overweighting in your old employer.

 

[REWahoo]

Some people here have said I have an agenda and i should not start a post taking these issues on. Sorry but this is the United States and we still have the First Amendment.

Freddy, while the second of the above statements is certainly true, I would remind you of the following stipulations in our Community Rules:

"About the First Amendment, censorship and your "right to free speech":

You do indeed have a right to free speech. However this forum is privately owned and requires members to abide by our guidelines and by the decisions of our moderators. If you cannot accept these guidelines we encourage you to contact one of the many good web hosting companies out there and exercise that right to your heart's content."

I saw nothing on the board saying it was moderated to limit discussion of topics.

Not quite. Once more, from our Community Rules:

"Other than politics not directly related to early retirement, we don't have rules about what is appropriate discussion material."

 

[harley]

Sorry but this is the United States and we still have the First Amendment. I saw nothing on the board saying it was moderated to limit discussion of topics.

We weren't talking censorship, sonny boy. Just manners.

And just so you know, this isn't the United States. It's the internet. And there is plenty of information in the Forum rules about moderation and topic limits. Again, not trying to shut you down, just pointing out that the folks on this forum tend to prefer facts to hyperbole.

Now feel free to back up your claims for UIL. Use attributions for your various claims such as instead of 10% returns over time since whenever the actual returns were 6%. If you validate your claims and I can check them, great. Maybe you'll sway my decision making. But I'm not buying just because you say so.

 

[ERD50]

Some people here have said I have an agenda and i should not start a post taking these issues on.

I agree with you there. I say, give a man a rope and see if he hangs himself. If not, then maybe we all learn something.

In defense of those who seem eager to run people off, they are right about 99.9% of the time.

Sorry but this is the United States and we still have the First Amendment. I saw nothing on the board saying it was moderated to limit discussion of topics.

Read the Community Rules again. This forum is a privately owned business, they can set whatever rules they like. We can choose to follow them and stay, or we can leave. Likewise, you can start your own blog or forum, and we won't stop you. Sorry, but miss-use of the First Amendment makes my skin crawl.

No load index funds or ETFs? Most got smashed last year. There are some simple things retirees could have done using technical analysis to have avoided the meltdown but did their broker tell them or Vanguard or Money or Smart Money? No.

So, if this information can be known, surely there are fund managers utilizing it to consistently provide superior risk adjusted returns to their shareholders. Except they don't.

One piece of advice for seniors is unless you really know what you are doing - do not own stocks especially overweighting in your old employer.

I disagree. That is good advice for *everyone*

-ERD50

PS - I see the 1st Amendment already struck a nerve response, oh well, I'll leave what I wrote

 

[M Paquette]

Someone mentioned the avg loss for people posting here or seniors was an avg loss of 20% which is not that bad but not that good and sounds low. No one can deny if you used John Bogle's buy and hold the S&P 500 for the past 12 years you made no money. Ditto for the Dow 30.

That would be unlikely, as Mr. Bogle's advice has consistently been to hold roughly one's age in bonds, and has recommended using total bond market and total stock market funds. One can simply achieve this through use of a balanced fund, such as Vanguard's VBINX.

Not great, but it did make money, and yielded dividends as well (currently at 3.83%)

UIL's have a fix number of payments in during usually over 5 years. If set up properly they are very tax effecient plus include a death benefit. I know both sides of the street very well. I know the secs and annuity/insurance side. Are they both ideal? No way. The secs side really let small investors down in a BIG way with massive hedge fund manipulation of the financial markets. After what the hedge funds were allowed to do with naked shorting, buying credit default swaps, spreading rumors, Madoff, etc. I have little faith in the SEC. If I had to trust the SEC or state insurance comissioners - I trust the states.

As someone cleaning up an estate that unfortunately included universal life policies, I'll have to differ. On one, for example, 10,200 dollars was paid in. The policy will pay out 7,200 dollars.

There are some simple things retirees could have done using technical analysis to have avoided the meltdown but did their broker tell them or Vanguard or Money or Smart Money? No.

Technical analysis is a trading tool, which tends to produce poor results in the long run. Seeing as this is an early retirement board, I suggest that the long run, time horizons of 20 years or more, would be rather common here. In the long run, index funds outperform active trading schemes, including mechanical timing. Trading costs and taxation (when trading in taxable accounts) will also take their toll and degrade performance

Investors have been told the 10% a year long term for stocks (S&P 500) is the normal but over the long-term after expenses it is probably closer to 6%. This is going back to 1928.

Note that these are not guaranteed annual rates of return. The market TENDS to return an AVERAGE arithmetic real rate of return of about 7%, or a geometric rate of return of about 8.5%, measured over value weighted US share indexes from 1802 to 1997.

 

[Freddy]

I agree with you there. I say, give a man a rope and see if he hangs himself. If not, then maybe we all learn something.

Debate and discussion usualy leads to ideas unless people decided to close off debate.

In defense of those who seem eager to run people off, they are right about 99.9% of the time.

99.9% of the people thought they were right about Madoff.

Read the Community Rules again. This forum is a privately owned business, they can set whatever rules they like. We can choose to follow them and stay, or we can leave. Likewise, you can start your own blog or forum, and we won't stop you. Sorry, but miss-use of the First Amendment makes my skin crawl.

I read the rules. Martha says the forums follow the First Amendment as longs as their is no spamming, attacks, profanity etc. Just trying to open debate on the subject. I attacked no one and aid you need to review all types of investments. Currently I think the securities industry has done a lousy job lately due to manipulation by hedge funds who make large donations to Congress.

So, if this information can be known, surely there are fund managers utilizing it to consistently provide superior risk adjusted returns to their shareholders. Except they don't.

I agree with you here.

I disagree. That is good advice for *everyone*

-ERD50

PS - I see the 1st Amendment already struck a nerve response, oh well, I'll leave what I wrote

I think investors should keep an open mind and do their homework. They also need to be wary of Money, Smart Money and CNBC.

Maybe I came on too strong but there is good and bad in securities, mutual funds, annuities and insurance. A no-load equity index or ETF with a 0.25% expense ratio does not save people a lotof $ if they lose 40%. They will need an 80% gain to get back to even.

Variable annuities are by in large for the birds. Fixed annuities are better than CD's but you fall behind inflation.

Equity index annuities at best avg about 4 to 8% but anyone here who had a 20% loss last year, as suggested by the median someone posted, will have to make 40% to get back to even. As I mentioned - the Dow and S&P 500 made zero over the past 12 years.

I suggested possibly the best strategy is covered calls but you have to be very good to make 8 to 13% consistently but it is possible. Deep value investing across a very diversified portfolio with some income can work but it requires a lot of work.

If someone hear consistently earns 10% over the long term, I would love to hear how they do it.