After being charged last month with four counts of insurance fraud allegedly linked to manipulating clients’ annuities, an insurance agent in Michigan will stand trial in state court.
The agent, Todd Bernstein, 67, has been charged with four counts of insurance fraud linked to allegedly switching clients from one set of annuities to another, a practice that generates fresh commissions for the insurance agent or financial advisor.
Bernstein, of Birmingham, Michigan, has been charged with submitting misleading information on annuity suitability applications on behalf of his clients, who were over the age of 65, to conceal that new annuities were being purchased with proceeds from early surrendered annuities, according to a statement earlier this month by the Michigan Department of the Attorney General.
A pretrial date for Bernstein has not been set. A phone message Thursday morning seeking comment to Bernstein’s practice, ABB Wealth Strategies, was not returned.
“Consumers must be able to trust financial professionals to act truthfully and in their best interests,” said state Attorney General Dana Nessel in a statement. “My department remains committed to protecting Michigan residents from illegal and predatory business practices.”
Annuities sales have been increasing in the rising interest rate environment, and that could lead to more instances of clients being switched out of annuities when it‘s in the brokers best interest and not the investors, some attorneys have recently noted. That could lead to cases of switching to generate fresh commissions for the advisor, and surrender charges and fees for the clients.
Annuities remain high-commission products in an investment landscape where financial advisors and firms are moving to charge clients fees rather than one-time commissions. Advisors and firms for years have tread carefully when selling annuities.
In April, a Massachusetts jury has found Cutter Financial Group and its founder, Jeffrey Cutter, liable for violating fiduciary standards under the Investment Advisers Act, marking a partial win for the Securities and Exchange Commission (SEC) in a long-running enforcement case that underscores the regulatory focus on undisclosed conflicts of interest in annuity sales.
In a verdict delivered Wednesday, following a seven-day trial in the US District Court for the District of Massachusetts, the jury concluded that Cutter and his firm, Cutter Financial Group, breached Section 206(2) of the Act. That provision prohibits fraudulent or deceitful conduct by investment advisers.
The jury did not find them liable under the more serious anti-fraud provisions of Sections 206(1) and 206(4).
The case centered on Cutter’s failure to disclose significant upfront commissions and other compensation arrangements tied to annuity sales to his advisory clients, many of whom were retirees or nearing retirement.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
