Annuity Switching

Variable annuity switching is a common abuse among senior citizens and individuals planning for retirement. The recommended purchase or exchange of a variable annuity requires that a financial advisor must make a reasonable inquiry about a client’s situation before making a recommendation to switch variable annuity contracts. Variable annuity violations are detailed in FINRA Rules and Regulations under FINRA Rule 2330.

The factors that a brokerage firm and their advisor should consider, at a minimum, before making a recommendation include: age; annual income; financial situation and needs; investment experience; investment objectives; intended use of variable annuity; investment time horizon; existing assets; liquid assets; risk tolerance; and tax status. If an advisor recommends the replacement or switch of a variable annuity contract, the advisor should consider the following factors: any surrender charges and/or bonuses received; loss of existing benefits (living or death); any increased annual contract costs; any increases in the surrender charge period; any product enhancements and improvements obtained; whether the customer has replaced another variable annuity within the preceding 36 months; and whether it was funded from an individual retirement account.

Other factors to consider include whether the variable annuities represent a significant portion of the retirement assets held by individual investors; whether there are significant surrender charges and other costs including compensation to the financial advisor for the recommendation; and whether the recommendation of a particular annuity is suitable for the investor.

If you are the victim of improper variable annuity switching immediately contact the attorneys at Mathews Giberson LLP to learn more about your rights.

Please contact us at 954-463-1929 to discuss your particular needs. We look forward to hearing from you.