LPL broker sues Ohio National for 'unlawful' move on variable annuity compensation

LPL broker sues Ohio National for 'unlawful' move on variable annuity compensation
Lance Browning is trying to stop the insurer from terminating annuity trail commissions on behalf of thousands of other brokers.
NOV 06, 2018

A broker with LPL Financial has filed a class-action lawsuit against Ohio National Life Insurance Co. and two affiliates for the allegedly unlawful termination of trail commissions on certain variable annuity policies. Ohio National stunned the insurance and brokerage industries in September when it announced it was terminating its selling agreements with broker-dealers and ceasing the payment of trail compensation to brokers who'd sold variable annuities with a guaranteed minimum income benefit rider. The move, which many advisers called unprecedented, affected the vast majority of brokerage firms. The LPL broker, Lance Browning of Whitehouse, Texas, claims Ohio National is "unlawfully trying to change the rules after the game has already started," according to the lawsuit, filed Tuesday in U.S. District Court for the Southern District of Ohio. Mr. Browning, who has been an LPL broker since 2012, also claims that Ohio National's decision won't reduce fees for investors, but that instead the insurer will "pocket" the trail commissions that otherwise would have gone to advisers, leading to its "unjust enrichment," according to the complaint. Mr. Browning is set to lose around $89,000 a year — a "significant" part of his business — when Ohio National's new policy takes effect in mid-December, according to the lawsuit, Lance Browning v. The Ohio National Life Insurance Co. et al. Mr. Browning has sold more than 100 annuities for which he is owed trail commissions, according to the filing, which claims his compensation will be cut even if he continues to provide advice and recommendations to his clients. He seeks to represent a class of several thousand brokers who stand to have their compensation for the sale of an Ohio National variable annuity with a GMIB terminated. One of Mr. Browning's attorneys, Dennis Concilla of the firm Carlile Patchen & Murphy, said the lawsuit seeks to enforce Ohio National's contract with broker-dealers, which he believes "clearly states" trailing commission will be paid for the life of the variable annuity. Spokespeople for Ohio National didn't return a request for comment by press time. The insurer announced in early September that it was exiting the annuity business and ceasing to underwrite new policies. Ohio National has $24.9 billion of individual annuity assets on its books, 95% of which are variable annuity assets, according to its most recent annual report to policyholders. Last month, following its announcement that it was terminating advisers' trailing commissions, it offered a new round of variable annuity buyouts to customers.

Latest News

Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households
Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households

Pew survey reveals slight majority consensus on tax rates, but views splinter based on political alignment and income levels.

The Fed's going to cut rates
The Fed's going to cut rates

While the Federal Reserve's decision to hold interest rates steady in March was widely expected, it's the reactions from financial professionals that provide a more nuanced picture of the central bank's approach.

Ontario Pension Fund revamps PE business in light of global risk
Ontario Pension Fund revamps PE business in light of global risk

The pioneering member of Canada's Maple Eight is stepping back from its go-it-alone private equity approach as a drought in deals and Trump's trade war prompt a rethink.

Raymond James, RBC reel in UBS advisors managing over $690M in assets
Raymond James, RBC reel in UBS advisors managing over $690M in assets

The firms' latest additions in Florida and Nevada come as a strategic change at UBS raises risk of advisor defections.

Assetmark debuts new advisor succession planning program
Assetmark debuts new advisor succession planning program

The new program offers opportunities and events structured for rookies, next-gen advisor leaders, and soon-to-exit veterans.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies