I recently attended a meeting of the Southern California Chapter of the National Academy of Elder Law Attorneys. The topic involved annuities and how the state of California is trying to stop the sales and marketing of improper and financially devastating annuities to seniors and the elderly. The problem has reached epidemic proportions. The sale of annuities to seniors and the elderly exceeds $200 billion per year!
The speaker, a partner in a prominent litigation law firm, talked about abuses he regularly encounters. His firm has litigation pending against some of the biggest and most powerful financial institutions in our country. He sees seniors who are talked into purchasing unsuitable investment products by agents, banks and financial sales people. They are typically contacted through direct marketing materials, bank representatives and seminars. The senior is truly unaware of the terms of their new investment contract. They are also unaware that that they do not have access to their money without paying substantial penalties, often until well beyond their life expectancy.
The speaker relayed stories where elderly people have walked into their usual bank to open a simple Certificate of Deposit or Money Market account, only to be referred to another individual sitting at a desk in the bank. The senior doesn’t realize that this helpful individual may not be a bank employee, but sales representative selling annuities. The initial bank employee often receives a bonus for referring the senior to the sales representative. The sales representative receives a large commission, and often prizes, incentives, and trips from the annuity company.
In October 2007, the California Department of Insurance developed the senior issues taskforce. The department recognized an alarming increase in cases where seniors are being targeted for the sale of unsuitable annuities. There are new regulations and statutes, which attempt to protect seniors, but few companies are actually following these new laws. The sale of these annuities is continuing with detrimental results to our seniors.
For more information, please call the Law Office of Jane M. McNamara, 661-287-3260. Our new office is located at 28212 Kelly Johnson Parkway, Suite 110, Valencia, CA 91355.