Dear Chris:

While I think your expose about equity index annuities was both timely and useful, why did you spend an entire hour exposing only one dreadful aspect of these annuities? You devoted the entire show to the issue of surrender charges. There is much more about these investments that should have been exposed: the low returns; the very high commissions (you mentioned this in passing, but never elaborated); and most importantly, the sale of these annuities ARE NOT regulated by the SEC. You had plenty of time on the show to expose these other important adverse attributes. Also, you should have presented someone like John Bogle of Vanguard to discuss why low cost index funds, such as the total stock market index and the total bond index, would outperform EIA's for almost any five year period considered. I think you missed an opportunity to explore ALL of the bad points about these annuities, not just one bad point. Thank you.

I enjoyed the show, and I hope it will cause unethical agents to get out of the business. I have been an insurance agent for over five years. I am sure you know that all industries have good and bad people in them and that DOESN’T make the product bad, people do. I do hope you will be the good in you industries and provide both sides of the story. FIA’s (Fixed indexed annuities) are a very good savings vehicle, with guarantees. They can provide lifetime income, market-like gains without the risk. They pass to heirs without probate, etc. FIA have surrender charges, and should be revealed. What investment vehicle can tell you today what you can sell it for in the future?? Annuities!!! Can you call a stock broker and tell him you want to put in money today, sell in five years, what will it be worth?? Yes Annuities have surrender charges, but if five years into the contract someone wants out, I can tell them TODAY what the contract will be worth five years from now based on surrender charges.(Guaranteed)
Annuities are not bad, some people are. Reporters are not bad, just the ones selling rating, not the truth.

Chris,
Journalism should be a description of facts without bias or interpretation.  Your story tonight exposed the drawbacks of annuities, without presenting any of the benefits. Doesn't one-sided journalism simply perpetuate the misunderstanding and fear that most Americans have towards financial products?  
If your aim is to educate America so that each individual can make the best decision possible for their circumstance, it would be beneficial to fully educate them.

A few things I'd like to comment about:
1)  I didn't hear anyone say HOW and WHY a senior can't lose money.  It's backed by the "claims paying ability of the insurer".  I kept waiting to hear that from SOMEONE when talking about the guarantees, but no one said it.  I think it's a very important disclosure.  Annuities are not guaranteed by any bank or government entity.

2)  The problem isn't their credentials, it's what they're doing with them.  They are touting themselves as people who are bigger and better than they really are.  It's a manipulation tactic to get people to trust them.  The fact is, is that many products are great by themselves.  If an agent needs to "puff themselves up", it shows that they don't really believe in their product and their ability to give quality counsel and advice to the clients they serve.

3)  I noticed that each one seemed to have a SINGULAR agenda - to sell 1 product.  I didn't see any fact-finding going on.  No questioning about someone's total financial picture to see if such a product would be appropriate given a person's level of savings, life expectancy, etc.  

4)  Annuity Surrender Charges.  Some of the annuities that were discussed had NO liquidity provisions.  Many quality annuities generally have up to 10% of your principle available without a surrender charge.  However, I've never been a big fan of the EIAs because of the size of the surrender charges, and the length of time for the surrender period.  From what I can gather, these exist SOLELY to pay the advisor a very large commission and to compensate the insurer to help them earn a greater profit on the sales and contract maintenance of these annuities - larger than other kinds of annuities.  

5)  The difference between MARKET risk and LIQUIDITY risk.  You see, you can't lose your principle due to market risk in an EIA.  But, you CAN lose money due to surrender charges because of lack of planning for emergencies.  No one should ever recommend that you put every single penny into any product.

So, not every insurance agent is out to "get you".  But they should be more forthcoming in all the terms and conditions of the products they sell.

And here's a hint for those who don't:  You will get more respect, less complaints, and more client referrals for being much more upfront about how your products work.  You may want to consider changing your ways.  You'll sleep better at night.

I have been a registered financial advisor for 15 years and have sold fixed annuities; and variable annuity.  In those 15 yeears I have never sold a equity index annuity.  The Dateline story did a great job of showing the deceptive sales tactics of some agents.  The biggest deceptions was in the surrender charges; if a senior would have to get the money out early for some unexpected reason.  The period of penalty were to long and percentage were much to high in most of these annuity being sold that was reveal by dateline. There are annuity that are great for senoir if proper fact finding is done and proper disclosure of the product features are revealed to the client.  Dateline should run another story about the agents and advisors who are doing things the right way; because there are two sides to every story and in this case only the bad part was brought out by Dateline.

Dear Chris:

I watched your program this evening on Annuities.  I am 58 years old, widowed, and I am permanently disabled with Fibromyalgia.  I purchased an Annuity in January 2008 without really knowing that much about it.  After watching Dateline, I went to my file cabinet and pulled out the "Annuity file".  I had no idea that my Annuity will start paying in 2021.  That's 13 years from now!  I will be 71 yrs. old.  The agents (2 of them) never told me this.  I have a small amount of money in liquid assets, but if my car dies on me, or whatever, I'm in big trouble about the terrible penalties involved in retrieving my money.  Are there any recourses out there for me?  I really need to cancel this annuity and put it in a short-term CD or something.  I am scared to death about this; I have a lot of years ahead for me and I am at a stand-still over this.  Please help me if you can to get my money back.  Thank you very much, Chris.  Carol Walldau

Hey Chris, great job!!
It was a real pleasure watching you do the same thing I've done for 15 years. As one of the better-known Life Insurance Fraud Investigators in the United States, I've done dozens of "sit-ins" and witnessed the way in which different agents peddle their goods. I am proud that, as a result of my investigations,  more than a dozen agents have had their licenses to sell insurance permanently revoked. I am currently working on a case that could potentially involve 70,000 teachers in California. 403(b) fraud against teachers in the U.S. is a huge scandal and the misrepresentation of equity index annuities are a big part of it. I think it feels great to help people who are being treated unfairly by insurance agents. Welcome to my little part of the world.    

I authored a book titled "Tell "Em"That's MY Money You're Messing With!" in which I suggest that legislators make everyone dealing with retirement funds be charged with legal fiduciary responsibility!

That's unlikely to happen due to our constitution.

This fast growing national concern is due to an immorality that can be significantly alleviated through education  ...thus I'm making a local for now grassroots appeal for people to help themselves by listening to an expert reveal the absolute truth and subsequently asking that they help spread the word.  

There is a right way to serve our seniors and a wrong one.  And believe it or not there are some Equity Index Annuities without severe penalties as revealed on your report.  And, ever so more important is the STRUCTURING of annuities versus buying them in isolation. The insurance companies do not want you to know how to use them in your best interest, they want you to follow their structuring. So, If you don't know how and when to use them they are useless and even detrimental. Used correctly however,they actually do provide unique peace of mind.

The history of the Equity Index Annuity would amaze you.  Its essential functions were designed for the wealthy elite and used successfully for decades.  One pioneering insurance company tested it as an annuity product and it was so successful so the others copied the system in various forms.  Unfortunately, like anything else there are some very good products and many more real duds.  It is Buyer Beware in America for everything especially annuities!

So, I devised a method to make them available with some careful consumer steps.

I charge a fee to create a well devised plan that prepares for every scenario.  I typically recommend an Equity Index Annuity ONLY for money that is not going to be needed; however, if that emergency did arrive, 94% is immediately liquid without a penalty.  It also has some other very fair provisions.

The client is free to go to anyone they want to make their purchase.  If they go to an agent with whom I have established a relationship, their fees are waived because they donate funds to me so I can continue to inform the public.

The other issues that are perhaps even more disconcerting are the fiduciary issues with 401k's.  I am an Accredited Investment Fiduciary Auditor TM not a "phony" designation, as it is taught by the Center for Fiduciary Studies in conjunction with the University of Pittsburgh.  One actuary recently stated that the average 35 year old in a 401k stands to miss out on more the $450,000 over the next 30 years due to fiduciary shortfalls.  ERISA does not have the ability to audit every plan so it's estimated that over 94% have serious shortfalls.

Oh, I happened to purchase the Financial Playbook Magazine marketing program BUT I wrote my own article and everyone knows it is published regionally so the same cover in another area has an other adviser on its cover.  

That's I believe fair marketing; however, ONLY when books and articles are in fact authored by the person named as the author.

I was not happy to learn that agents do not write their own articles for their issues.

Please feel free to contact me.  If my email address is not shown just look up my book available through bookstores everywhere.

Your reaching with your annuity story, Mr. Hanson. (NOTE: I'M NOT IN THE INSURANCE OR INVESTMENT BUSINESS) First off, they are legal to sell and secondly, let the buyer beware.  And what about the information you put out?  You mentioned Allianz is headquartered in Minneapolis.  Maybe in the U.S., but it's a German based insurance company.  That was one of several glaring and misleading assertions you made.  
    One could go to a used car lot and find bigger rip-off salesmen or spend a day at an advertising agency who sell lottery tickets.  They deceive the public everyday by telling them they have a chance to hit it big!  Is it a lie?  No, but they're selling a fantasy product to over 95 per cent of their clients.
    Like I said, you're reaching...

Watching the show, a question came to mind, that made me think and feel bad for some of the participants.  1.  These insurance people were called to come in and present an annuity.  2.  We didn't see any profile or risk tolerance views, or what the goals of the clients were.  3.  Comparing an investment or annuity with a savings account/cd fdic account?  Gee whiz you put people in a spot where their job is to sell and hang them out to dry, I think people make mistakes, or even if they feel they are doing something right they are doing there best.  I am not saying these folks are saints, but my wife asked if buying a car and then changing your mind later and dealing with the repercussions was the same?  Well, I guess its kind of the same?  No? It seems that some of these folks may not be clear on the purchase and maybe not as easy to comprehend as a car transaction, but I feel these people are buying an investment, with no plans on taking money right?  I think the interviews walked a fine line, that really portrayed things one way. I am a highly educated individual and what's more alarming is the economy and the fall of every state are the subprime mortgages that people did not understand.  So what's worse? bad economy and losing your house because of poor mortgage officers or someone seeking out alternative investments and having buyers remorse?   I don't know about these segments, as if people start to get scared of any and all investments, inflation will be more cruel at the end of retirement.  People that don't save will drain our social security and will cause people to retire at 75 rather than 65, do we all really want to work that long?  I can tell you this much if you do not invest money for the long term, you will be working at the local walmart as a greeter.  Look around its already happening.  I feel this is a mistake, we should be learning the pit falls of poor mortgages, and teaching the public to save and not spend money.

I couldn't agree more that these types of high-commission products are far too often being over sold to retirees!  Whether it is an annuity, a mutual fund, a reverse mortgage, etc, I believe that any financial product that limits a retirees access to their hard earned money should be strictly regulated/controlled.  Is this going to happen any time soon?  Probably not...

In the absence of additional oversight, why can't we all just agree that, when selling these types of products to retirees, we will let the investment company, insurance company, etc allow the client to walk away without penalty (should they need their money for ANY reason) and, if necessary, we will return any commission that we earned on that sale??

If the commission is taken back from the rep, maybe there will be fewer cases of retirees being penalized for accessing their money just when they need it the most...

Hello Mr. Hansen:

Let me begin by saying that your efforts to protect the consumers that are the most likely to fall prey to the worst members of what happens to be my profession are welcomed by myself and the agents that work with me.  

As the Owner and President of a small but well respected Insurance Agency here in Panama City, Florida, I am hopefull that I will be able to explain to you why I fully expect to have our telephones ringing off the hook first thing Monday morning.  

The agency I own was started by my uncle 40 years ago.  I was fortunate enough to have the opportunity to learn "The Business" from him beginning in 1991.  My Uncle passed away 9 years later.  His Wife, my Aunt, fearlessly assumed the role of Owner and President of this small Independent Insurance Agency.

At that time , my Aunt was enjoying her time as a retired school teacher. Which deserves so much more admiration than that of an Independent Insurance Agency owner.

She made it possible for myself and my fellow agents to continue to provide the same service that my Uncle not only built his agency on, but instilled in  every single honest, respected independent insurance agent that was fortunate to work for him.

Several years later, My Aunt, Doris Featherstone, gave myself and my two partners the opportunity to keep this little agency open and at the same time, she gave our clients' all 9,546 of them, the piece of mind that they had come to rely upon.

That being said, I feel that i would be remiss, if I did not express to you my deep convictions regarding the principals that I beleive, the majority of my fellow Licsened Life and Health Insurance Agents possess.  

In my opinion, you and your organization have a great respomsiblity to each and every person who purchased an Equity Indexed Annuity, that was informed about every single feature of this paticular type of Annuity, to include, but certainly not limited to the surrender charges, which seemed to be the " smoking gun" in most of the hidden camera segments that were presented by your program.

My biggest fear is that the potential millions of consumers, that were properly presented with this paticular type of annuity, who were well suited for and have enjoyed the benefits that this paticular type of annuity have provided, feel like they have been mislead, when this was not the case.

Please consider this fact and act accordingly.  The way that this story was presented may prompt some people to surrender certain annuities that may have been properly presented to people who have previously and continue to benefit from the features of these products that have been approved for sale in " to the best of my knowledge" most each and every state .

I applaude Allianz Insurance Company of North America for their effoerts to not only protect their unsuitable clients, but for the job they are doing reassuring the well suited clients who have enjoyed the benefits of these paticular policies.

The type of reporting that you have become so well respected, admired and revered for has protected and saved more lives than anyone can ever imagine.

Please consider the ramifications to not only the professional likcensed insurance agents, but also the elderly consumers that have purchased and enjoyed the benefits that these type of annuities can provide.

I would like to thank you in advance for any assistance you have and will continue to provide for the Senior Members of our society.

Respectfully,

Ewald S. Munczenski, President
Jack Featherstone Agency, Inc.
1815 West 15th Street, # 1
Panama City, FL  32401
850-785-1213


 

Outstanding program. Exposing these snakeoil sales people is most important. As an insurance agent and Financial Planner for 42 years you will alway have 5% of any business that are bad, that goes for Insurance, doctors, lawyers, news people and politicians. Guy Brickman, CLU, ChFC, CASL, CFP

I keep reading on this blog how the media slants the truth, good and bad people, responsible agents.  It looks to me that these people do nothing to clean up the so called bad agents that work within their industry, but rather are helpless about the situation and prefer to complain about how they are being victimized by the media.  The truth is that there are people getting ripped off and they do suffer, and the only way to address the situation is by what Dataline has done.  Now lets try to figure out how to indentify the good from the bad.

The biggest issue I have about this report is that it didn't spend 5 minutes on telling folks about the merits of annuities, especially the ones that are sold using the correct suitability and disclosure processes.  I only hope that it didn't scare seniors that already have an annuity that is past its surrender period and suitable for their investment needs to run out and change becuase they are now scared their product is bad. That situation is just as bad as selling them the wrong investment.

Chris,
Do you think a fixed index annuity is a good choice for a 401k rollover? I am not concerned with the surrender charges, just want your opinion.  

Chris,
Thank you for exposing these scam artists. As you can see by the above comments, most of these salesmen have "drank the Koolaide."  These people have convinced themselves they are "doing right" by the client by selling these puffed up products. They actually believe in their head they are helping people. The only people they are helping is themselves.

  What you did not mention in the episode last night is the amount of commission that goes to the rep for selling this product. Some can be as high as 10% to the rep. That is $10,000 of a $100,000 investment. The motivation is there to sell these products. The solution is more shows like yours and regulate the commissions to 1%. If the commissions were the same as other investments, reps would snap out of it and actually do the right thing by the client.

 I hope to see more of these shows in the future.

I noticed you edited out that all the EIA that were presented have a 10% first year bonus and also that none of the "high commissions" come out the client's money. I have been selling annuities since 1987 in Longview, TX and they are a great product for the right situation. Also, you edited out the part where the agents explained waiver of surrender charges on death, nursing & home health care, and terminal illness. You also failed to mention that most brokerage firms charge their clients a 1% or more wrap fee on their whole account every and that comes out of their money.  The person who only had $40,000 total life savings should not been in an annuity. I agree, agents should make full disclosure and not represent themselves as anything but insurance salesmen.

I am a RIA and use Fixed Indexed Annuities. There is no problem with this vehicle when used properly and full disclosure is made. The problem is dishonest people which you pointed out, however; you are remiss in pointing out positive aspects of this product. Annuities serve a very useful function in the financial world and inspite of your negative report they will continue to do so.It would really be fair and unbiased to report both sides of the story. Afterall when you withhold information from the consumer are you any better than the guy you portrayed in your episode?    

As a licensed insurance professional who has written over $100 million of index annuity premium over my career, I would like to formally invite Chris Hanson to interview me or any of my advisors. If Dateline is interested in presenting a balanced view of this industry, he'll take me up on it. We are committed to ethical business practices, and have nothing to fear from media scrutiny.

I would also like to add my voice to the chorus of support for the ethical agents out there promoting "the good" equity index annuities. These financial vehicles offer upside growth with no downside market risk, as well as favorable tax treatment, avoidance of probate, provisions for emergency withdrawal, and many more benefits. Yes, there can be surrender penalties, but they can be managed in all cases and avoided in most. If consumers are presented with "the good, the bad, and the small print," most make the informed decision to protect their nest eggs from market volatility with guaranteed safe accounts from the insurance industry.

Full disclosure of all contract terms is required by state law, of course, and all ethical agents follow that to the letter. In the interest of good journalism, I urge Dateline to contact my office to get the part of the story that it seems to have ignored.

We have experienced a similar problem with an Annuity provider. Where can I obtain a list of those insurance companies that are under investigation?  Thank you.

Dear Chris,

Great Job, you need to come to Florida and save the  seniors. They are being taken for a royal financial ride by the insurance agents. Not only are they being sold annuities, at the same time the dear friendly agents sale them promissory notes and property investments. Of course we know what the insurance agents do with the seniors money that is invested in property and promissory notes. The money is given to the agent and not the insurance companys. That's right, they spend it on their billionaire life style.    

What the insurance sales agents do not tell the seniors when they sale them a 10% bonus index annuities; it is not a take your investment plus earnings and walk away after 10 years. That means it matures after 10 years, but they can not take their money out of the annuities. If they do, they will lose the 10% bonus plus some of the index earning. It happen to my parents. The bonus was to help pay the surrender charge on an annuity they already owned. The new bonus index annuity was surpose to be better than the fixed annuity they were transferring the money from. It is a 20 year annuity. After 10 years if you do not take a 10 year pay out than you lose most of the earnings. Most senior don't know they purchased a 20 year annuity becaise the sales agents do not tell them.

The State Insurance Commissioners really needs to take a good look at the agents and were the peoples money is invested at the time the agent sales the annuities. Most funds are being transferred from fixed annuities to another fixed annuites just for commissions. The big insurance companies know they are transferring the elderly peoples funds out of an annuity from other insurance company to sales their annuities.

Hi! Chris
Your report on EIA annuities was true of some sales people.  I personally own EIA Annuities and have been pleased with its return over the last 3 years I was 55 when purchased.. The product you need to look into is variable annuities sold by Brokers. In this product you not only have to pay fees for getting out of the product but your tied into the market as it goes up/down and your only option when going down is take the loss or baleout.

Chris,
Typical reporting. There was as much information missing as there was related. There was constant reminders  of "tying up your money for years" but little reference to "income for life", which, by the way, only annuities can offer.

You never related information concerning the best annuities that will allow access up to 20% (if you didn't take the 10% the year before) up to 75% access to the money in case of a nursing home or 100% back in case of terminal illness. You were only concerned with surrender fees. Any agent worth their salt will do a complete fact finding (the agents you intereviewed did not) prior to allowing any of their clients to put money into any type of annuity or any type of investment and the proper diversification. I find only stock brokers will advise their clients to put all their eggs in one basket.

I did like the exposing of agents writing "ghost" books and articles. That's true deception and should be outlawed.

I'm sorry the people you interviewed were mislead, but it wasn't the product that mislead them, it was the agent. I'm sorry the man lost his home, but I doubt it was due to $6,000 in surrender fees. More than likely it was due to his wife's medical condition and its costs.

Although you advertised an expose for "tricks of the trade" purportedly exposing misleading sales tactics and agents you spent as much air time demeaning Index Annuities as you did on the advertised subject. A great injustice for a product, that when sold in the right circumstance and with the proper diversification, is an outstanding financial vehicle.

Thank you for treating the practice of selling insurance the same way you would child molestation.  It seems you only focused on the bad and yes there are a lot of unethical agents who need to be stopped, but you were not biased on the story.  You never showed the benefits of annuities.  You have scared a lot of seniors.  The same way the unethical agents scare them.  Annuities avoid probate and create an immediate estate.  You should never have more than 20% of your saving in an annuity.  You know if you withdrawal from a CD, after the penalty, you could end up with less than what you started with.  Annuities do a lot of good for people.  I don't like the EIA either but there are a lot of good ones and you should have mentioned that.

Mr. Hansen:
You should come back to your old stomping grounds in the Detroit area - there are a few companies here that are taking advantage of local seniors.  
They start out by buying phone lists and cold calling senior citizens.  The script is to tell the senior that they sent in a card to "Estate Services" for free information and that they would like to send out a representative to drop off the free and valuable information.  If an appointment is set, a representative of "Estate Services" comes by to give an hour presentation on Living Trusts.  More often than not, the representative is not even a lawyer, but the Living Trust is prepared by a "Straw" law firm. If the senior buys a Living Trust, on delivery, the sales representative brings with him a "financial expert" (Annuity salesman)to "fund the trust".  Because he is there under the guise of "funding the trust" the seniors tend to trust them and often buy inappropriate annuities, even EIA's.  The main financial advisor also says he has a book that he wrote though all he did was pay $5,000, write his bio and dedication.  He often uses scare tactics and bullies seniors into feeling that if they do not buy what he suf=ggests, they are not properly "funding their trust" and will not be protected.  They even call these annuities "trust funds". They also use Medicaid scare tactics and are getting into reverse mortgages.
These companies operate out of a building on Maple Road in Troy - you should really investigate them thoroughly.

Mr Hansen, Sunday's program on insurance scam's was very informative. I would like to see a program on Lawyer's who take a vantage of people,there are some very good and honest Lawyer's however there are way too many dishonest ones that give the good ones a bad name. Thankyou

Chris,
My father was taken advantage of by an unscrupulous bank associates selling annuties to seniors.Employee was terminated and my father in his seventies and onset of Alzheimers has hit a brick wall on trying to recoup or get out of it. Is there someone in the state of Pa that can assist or can be contacted in reqards to this matter. I am an insurance agent in the state of Fl. and would not do what these people have done, but my hands are tied to assist.  

Dear Chris,
My husband and I just purcased an indexed annuity from Amerilife agency in the Port Richey area. The funds were originally in a Florida Retirement System, and was retirement money for the future. We are both 67 yrs. old, and this money is practically all we havee. Were stuck with 17 years and penalties appox. 20% if we need to withdraw for any reason. Is there any informtion about Amerilife lawsuits, and what protection do we have?? What an eye opener the show was, too bad we didn't see it sooner. In act, I got the policy out when I recognized the folder from Ameriquest, and I tried to read the policy as you were asking the same questions that we had wondered about. Great work, help if you can. Thanks again, Jackie and Tom Bogashewicz

My mother and father trusted a long-time "friend" to sell annuities to them.  Ron Johnson,who touts himself aa a financial person (all he really does is sell annuites)in Mesa, AZ, sold my mother a $40,000 annuity while my father was dying.  He told her it was a wise investment.  My father died ~ 3 weeks later - never knowing what she had bought.  That was in May 2006.  My mother passed in February 2008 and her $40,000 investment is worth a little over $39,000 at this time. This was probably the most egregious of all the investments he sold my mother and father.  She was 78 when she purchased the annuity through Standard Life of Indiana.

Chris,
I watched with interest your show last night regarding
some unscrupolous insurance agents selling unsuitable
annuity products to unsusepecting seniors.
You also spent considerable time interviewing Minnesota Attorney General Lori Swanson.
I have had a securities license and a life and health
insurance license for a number of years.  Now that I am a"senior" myself I have become more interested in annuity products than previously.

I have one possible solution to the "scamming" of seniors regarding annuity products.  For a number of years the mutual fund industry has been regulated through the Investment Company Act of 1940.  One regulation states that MAXIMUM sales charge/load
that a fund can charge.  Further, competition has
helped to keep these costs down.
Perhaps the NAIC (National Association of Insurance
Commissioners) might adopt a Model Law, as they have done with other products, for the states to adopt
regarding limits to maximum surrender charges and the time necessary to be fully vested in the annuity product.
Insurance companies, and their sales agents, who offer products with 20% initial surrender charges
and 15-20 before they become they become fully vested
is a disgrace to then industry.  Only education and
regretably state intevention is the only solution.

I am a huge fan Of Dateline.  However, a very poor job was done on your April 13, 2008 show.  I am an insurance agent and I do sell Equity Indexed Annuities through Allianz.  The products offered by Allianz are excellent products and a perfect fit for many senior citizens.  The final comment aired last night by a senior citizen saying, "don't buy these products", is a sad note to end the show.  Equity Indexed Annuities are a perfect investment for those seniors who do not need to get to all there money.  I completely understand that many agents are only interested in commissions and do not always use ethical sales methods but this is true in any business including TV reporters.  Dateline is the best but try to remember that not everyone is a scam artist.    

Chris: Yes there are agents that should be held accountable for failing to disclose all information and by using bogus designations. There ARE designations that are legit. Also, the bogus magazine articles have no place either.

However, fixed and indexed annuities are very appropriate vehicles for seniors in many situations. No one should ever put all their eggs in one basket. A person should should always maintain an emergency cash position. I have yet to see an investment or insurance product perform for the client if the account needs to be regularly accessed beyond penalty-free withdrawal amounts. Tax deferral and compounding works best over time. Hence, surrender charges...which should and must be disclosed by the agent. For years Stockbrokers have been selling variable annuities which unlike indexed annuities, subject the capital to risk of loss. They are also high in fees, have surrender penalties and clients cannot get out of them many times without substantial loss. In my opinion, these are investment vehicles that should not be recommended to anyone over the age of 45.

Fixed and indexed annuities are terrific cash accumulation and cash distribution vehicles that absolutely are suitable for many people, seniors and otherwise. Your investigation, while focusing on disclosure of surrender penalties for withdrawal beyond the penalty-free amount was not balanced. You should also have a professional planner show your audience the best uses of these products that provide income one cn never outlive and potentiall protect one's nest egg from medicaid spendown and the claims of creditors and preditors. In my opinion, you did more harm than good by not showing a balance.

Chris,
I am a Financial Advisor with a legitimate Sec regulated firm. I think your program was great on Indexed annuities. It would be helpful to have a follow up on an important point we missed here. ThaT is how they work and what the risks are in using them for income..First, They do show at least the amt invested, net of any withdrawals..What they fail to properly explain is that they typicaly keep 30% of the S$P returns ..That means if they have 100k invested and the S$P earn 10% or 10k on 100k, the ins company keeps 30% or 3k..That is 3% commission..Most Inde3xed annuities pay 10% to the agent..ouch..where do they , the consumer think that comes from..To make matters worse...if the client took out the 10% to live on, i t would,thus, be impossible to regain the withdrawal and the statement would read 97k..So while I think the story was great..There is much more than meets the eye..It could get worse.. Greg in Wisconsin

I purchased a Variable Annuity from AXA approximately 4 years ago. They did not explain surrender charges or even what the yearly costs of the plan were to me.Is it possible to roll this type of plan over to something else without it costing?

Chris Hanson, please read the Update to my posting, dated April 11, 2008, on the PA Elder, Estate & Fiduciary Law Blog (http://paelderestatefiduciary.blogspot.com) about your program.  Then you will understand why the one interviewed agent knew about your investigation when you revealed your identity.

Mr. Hansen,
It is typical of "Scare Journalism" to only present one side of the story. It was extremely irresponsible of you not to present the positive side of the FIA products that are being sold to seniors. These products offer tax deferral, are probate free, have no surrender charges on death, nursing home or terminal illness, offer penalty free withdrawals, growth that can exceed CD's and similar safe money vehicles and offer long term safety. It has been my experience in my 15 years of working in the Insurance Industry that there are more good agents out there than bad ones. There agents who care about there clients and have been trusted advisors for many, many years. Like any service industry, the insurance companies offer products that the consumer can purchase or choose not to purchase. Every industry has their “Bad Apples” and the insurance industry is not immune to it. For every bad contractor, doctor or car sales person there are hundreds that have served their customers well. Your type of “journalism” also preys on seniors by keeping them misinformed.

I am a Financial Advisor and former banker - SVP over lending. I am glad to see the truth come out about equity index annuities. They are bad. However, the attorney general of Minnesota misspoke when discussing penalties on EIAs as compared to CD penalties. If you put $100,000 in a five year CD and request the money back 1 week later. You will not get the entire $100,000 back. That's why it is called a penalty! The maximum CD penalty is 6 months interest. If you have accured 6 months interest, the remainder comes out of your principal.

Good points were raised about the distribution of annuities.  However, only one distribution network was explored.  Chris really missed the mark because BANKS are a huge distribution channel for these things.  In the story, the independent agents were invited into the senior's houses.  The bank sales technique is much more subtle.  You don't even know you're leaving the bank and walking into a stock broker's office...

As an insurance agent who sells annuities to seniors under strict compliance guidelines, I would like to know when the follow up to this program will be aired? Meaning, I go to work everyday, with the senior populations best interest in mind and truly beleive that fixed annuities are a blessing to some people. Suitablity is key here! As I understand your purpose is to "get the word out" to seniors whom this product might not be good for...there are people out there that this product may be able to help as well. As I said before....when will the follow up to the positive side to fixed annuities be airing? I will certainly tune in.

While I enjoyed your show, I think you should expand upon the negative story of annuities in a series of shows.   There is so much to uncover, you could have made this a mini series!   You focused only on the surrender charges.  You made no mention of the amazingly high fees and insurance expenses charged purchasers of these products while they own them.  These variable annuities are nothing more than mutual fund investments with a veneer of insurance, which guard against loss.  You pay for this insurance through yearly fees, which vary between 1-3% a year.  The insurance company’s give nothing away.  You pay for this ‘protection’.   You’re buy insurance to protect against the stock market falling over a 15 year period, something that has yet to happen in the last 100 years.   After you pay these fees, it is difficult to make a decent return, hardly worth tying your money up for 15-20 years.  Put your the money in the bank.  If you can’t afford to lose money don’t play the stock market.  

You also have the issue of churning.  My father and mother in law have been sold 3 of these annuities over the past 12 years.  Every time they reset the annuity surrender holding period and their salesman (crook) gets another huge initial commission check as he sells them that this new annuity is better than the last.     The commissions are very high (5-8%, or more) in the first year.  The only reason these crooks push these are to get the high commission.  The one fellow you highlighted at the end of the show, said he focuses on these variable annuity investments only…do you mean to tell me this is the best product for everyone?  I think not…it’s the best thing for his wallet.

Annuities do have the benefit of tax deferral, which in some cases make them almost worth all the fees.  However, when they are sold to folks with IRA’s (which are already tax deferred) this eliminates this benefit.  My in-laws were convinced to buy this product inside an IRA.  Another rip-off.  The last sale was just a month or two after my father-in-law passed away, when the salesman pressured my mother-in-law to quickly make a decision, locking in 75% of her portfolio for 15 years, while securing him another huge commission check.  They worked  40 years to development a nest egg and this crook is siphoning it off.    

Dear Chris -
I am about to engage in what is called a "structured settlement" from a medical malpractice settlement.  This will be in the form of an annuity purchased through an insurance company.  Is this something I need to be leary of or are these annuities different altogether?

As a 25 year old investment professional, I have seen all kinds of interesting things in my admittedly short career. One of the things I am happy about is that I work for a financial institution that does not allow more than 50% of any clients' money to be deposited into annuities, because of situations like this, even though a previous employer encouraged it.

Although there was an incredible amount of information that Mr. Hansen decided to ignore, regarding the positive side of annuity products, it is sad that there are agents and companies out there that will cripple a "client" just to make a few more dollars. FIA's, FA's, and VA's MIGHT have a place in a client's overall investment profile, but that is something to look into, for tax and cash reserve consequences. I am dismayed that Mr. Hansen completely neglected to report on the numerous companies that offer 5 and 7 year FIA products, all with surrender charges well below 10%. But, sensationalism for this network once again reared it's ugly head, and prevented ALL of the facts from coming to light. This article could have been so much more powerful and informative if, when speaking to the Insurance Comissioners, there where questions about validity of FIA's in general, as opposed to the ones that were listed.
If you want to do an expose, Mr. Hansen, I would suggest following up on the "Senior Advisor" designations, etc. There is no such thing as a recognized "Senior Planner" or advocate or any other such designation. While an individual can mention they have spent time working with and learning about senior issues, every agent in the country has, because that is were the money is. I will readily admit that I take as much time as I can to learn about tax benefits, rate and liquidity benefits (as well as nursing home waivers, death benefits and more) about policies and procedures, so that if there is a product need for a client, I can recommend something that meets as many of their needs as possible.

Furthermore, my institution has review and policies in place to limit the abuse of senior clients. But, there wasn't the mention of companies with that in your article either.

I would have preferred to see that you would have covered both sides of the fence, but I knew when this was sent to me that you wouldn't. So, I am asking you now, for the consumer sake, to please do a follow up on this subject matter, and the institutions and companies that work to protect their clients needs and rights.

I am definately shaken by the Dateline preview.  Last year I was approached and purchased into  annuities "A flexible Premium deferred annunity policy with a index benefit".  I purchased two, one being an IRA and the other plan type I'm not sure.  With a sinking feeling in the pit of my stomach I get my documents out and attempt to read it completely now, because I did not hear my sales person mention fees. I do have severe surrender charges and collectively I have roughly $100,000 in hard earned money in a company mentioned on Dateline and I am afraid.  I thought I was doing the right thing by planning early for my retirement. I trusted my agent.  

I really enjoyed this investigation. I know it dealt with annuities and seniors, but there are companies like Primerica doing similar things to good people and getting their friends to do it to them. It sounds good when they present it to you but if crunch the numbers I think you will find it's a rip off. They make money by preying on individual with dreams of being financially independent and then telling them what and how to do it. Most people start the process and pay fees and then stop and the don't get the money back. It's another case of the rich getting richer and the poor getting porrer. Chirs should look into the practices of Primerica. I would love to see what he digs up on them. I think they use the same tricks of the trade shown on this episode.

Chris:

 I applaude you for all of the many DateLine investigative reports that you have undertaken over the years.  Your balanced approach to identifying signficant scams and preditors (of every ilke) is the best form of consumer protection/education that American is receiving.  Having said that, I am a 50 something retiree, who is a victim of the EIA sold by an Allianz agent in Maryland.  In short, I attempted to transfer only $10,000 into a Fidelity product.  Of course, the surrender charge would have cost me almost $4,000!  I complained bitterly to Allianz, that the agent had informed me that I would have unfettered access to cash if I needed it.  That his representations were patently false. The Allianz representative gave a cool, "I apologize" for the "misunderstanding."    

As an investment advisor, I sent a link with comments to my clients encouraging them to watch your show, keeping their friends and family members in mind.

While I appreciated your efforts, I was disappointed that you didn't cover how some simple regulatory steps could all but eliminate these types of sales tactics. For example, the insurance companies should have appropriate disclaimers and suitibility questions written in clear and simple language which are signed by the client and made part of the contract. The good companies have already made this mandatory. Also the insurance companies should not be allowed to design contracts with such long surrender charges. Many respected firms only permit seven to nine year contracts with only a small percentage of a client's assets invested in this product.

The main issue not addressed is the fact that this product has long been considered a security by many compliance departments. Why the SEC does not simply require these products to be registered is a question many have been asking for years. If the product was in fact registered as a security then the sales and product would be supervised by the various compliance departments before an application is even processed. Our firm has a strict policy on these products, not because there isn't a place for them, but because of the potential abuse that exists not only with these but all financial sales. If the regulators want to seriously address these issues, they need only to register sales of these products as securities.

There are firms and sales offices who encourage their registered representatives to give up their licenses in order to avoid securities related supervision. This practice is going on in many states and will only continue without proper regulatory supervision.

Solving the problem is for the most part as simple as that!

Dear Chris:

I do understand the frustration all folks must have with the improper selling and advising of EIA's. I have been in the Securities industry for over 23 years as a financial consultant and have seen lots of changes. As for EIA's, are they for everyone? Absolutely not! But do they serve a proper niche? Yes! For certain people, these investment vehicles can fill a part of their over-all financial plan. I do agree with FULL disclosure. Most EIA's; at least the ones I recommend, do allow for 10% free withdraws each year and the others out there should be required to do so. These are long term products, but should not have surrenders past 10 years, either. These products should be under the old NASD, now FINRA for total regulation and the insurance agents should be required to be security licensed too.Because EIA's are not, the crooks only need their basic insurance license. FINRA has in-directly put many mandates on us ture advisors, that do make us fully disclose and use proper practices to make sure it fits within the clients overall mix with their goals and objectives. You make us all look as crooks, which is not the case. If these agents were all to be securities licensed, then their Broker Dealers,could do the proper due diligence as mine does. We are required to get pre-approval from our home offices, from supervision on each and every EIA case, to make sure it is suitable for the client. We also must prove and have multiple signed statements, in addition to the EIA paperwork, that breaks down every potential guarantee and surrender charges etc.All these forms must then be sent in to our B/D for a complete look over. Our Broker Dealer also, only allows us to use EIA's from an approved list that has been approved by our supervision department, which I will stress does not include any EIA's with horrendous surrender periods. If its not on the list, we cannot write them, if we did, we would face sanctions and termination of employment also possible industry sanctions etc. If my Home office does not find that I have done my job properly, they will not allow me to do the case. Also, on policy placement/delivery, we must then again have the client sign that we have gone over everything in contract form. I agree that there are products that should not be allowed in the marketplace and have surrender charges twice as long as the ones I recommend. The ones I use, when it suits the clients needs are less than half what you spoke of.Bottom line: Make EIA's part of FINRA platform, make ALL agents have security license's so that they can be monitored by their B/D's Broker Dealers and the industry should be required remove the longer surrender period products, that shouldn't be available, anyway.

Now, as you know, your entire news show was all negative. Maybe sometime you can look to some positive aspects? But unfortunately our whole society is soooo negative, as you know and they thrive on NEGATIVE news! Kinda sad! Real sad!So that would not be an issue you would ever cover!

Ted H. Franse
Registered Principal and avery other license you can't imagine.

My wife and I were sold one of these and after this report are wondering if anyone was able to recover their money without the penalties.
If yes how were you able to do it? We would like to recover ours.

I too was sold an index annuity by my financial advisor who said he had set up the same plan for his mother. That it would keep my money safe.  Not telling me I couldn't get to it for 10 years without a penalty. At the time I was 64 years old. So he should have known I might need it before 10 years.

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