“In light of the concerns that have been identified by financial advisers through
InvestmentNews,” Connecticut insurance commissioner Thomas R. Sullivan will look into whether The Hartford participated in “misleading practices” in its marketing of a new variable annuity, the commissioner's office announced today.
Specifically, Mr. Sullivan's office will examine a letter sent to Hartford Financial Services Group Inc. clients Aug. 23 and obtained by
InvestmentNews that made statements intended to entice them to swap their variable annuities for an updated product.
Tim Benedict, a spokesman for The Hartford, responded in an e-mail: "The Hartford works closely with state insurance regulators and responds promptly to regulatory requests. As such, we are happy to address questions from the State on this topic."
Mr. Sullivan noted in an e-mail to
InvestmentNews that The Hartford's replacement VA, called the Personal Retirement Manager, has been filed and approved by the state's insurance department. He added that his office “has not received any complaints related to this product or to the recent correspondence sent by The Hartford.”
The letter, however, has infuriated broker-dealers and advisers, who said that that they weren't given any advanced warning and didn't get a chance to discuss the letter with their clients.
(Click here for more details on the letter.) A similar letter was sent simultaneously to the clients' advisers, along with a list of clients who would be receiving it.
What's worse, advisers said, is that the VA exchange does not benefit most clients, who would give up some retirement income guaranteed under the old contract.
Executives at Raymond James Insurance Group and Commonwealth Financial Network separately contacted representatives at The Hartford last week to express their frustration about the letters.
And several advisers contacted last week by
InvestmentNews said the letter has forced them to re-evaluate their relationships with The Hartford. They've also been scrambling to notify their broker-dealers and doing damage control with clients.
Regarding the letter, Mr. Sullivan wrote: “Companies have the right to correspond with policyholders, and financial advisers have a fiduciary responsibility to advise clients as to what's in their best interest. The letter does direct policyholders to meet with their financial advisers to determine if this product suits their needs.”
