Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with broker-advisors who’ve recommended variable annuities. There’s little question that when broker-advisors peddle variable annuities to clients that in most cases it’s in the best interests of brokers, not customers.
Variable annuities, or “variables,” are complex investments that combine mutual funds within a “wrapper” of an insurance policy. Beneficiaries will be paid a death benefit when the holder of the annuity dies. In the interim, an investor’s capital is invested in an array of mutual funds that can invest in bonds and stocks.
When variable annuities are combined with other insurance policies, the broker’s pitch is that you can tap funds at any time. But the truth is that you’re paying onerous expenses in this set-up. Such arrangements can run afoul of securities regulations. When variable annuities are paired with a whole-life insurance policy, it could constitute an “unsuitable investment strategy,” according to FINRA, the main U.S. securities industry regulator. FINRA recently reached a $1.3 million settlement with a broker-dealer owned by Ohio National Financial Services (O.N. Equity Sales Company) for selling this package to clients.