by Structured Settlement Watchdog
It is no secret that certain structured settlement brokers and settlement planners are referring business to factoring companies. Some have even permitted their name be used in advertising publications of such entities.
Due to the confusion created by a long stretch of certain misleading factoring industry advertising it's possible that a person contemplating selling their structured settlement payment rights would call a real structured settlement broker or settlement planner in a case of mistaken identity. It is also possible that an annuitant placed by that structured settlement broker or settlement planner might call them for advice on what to do if they need cash.
What the structured settlement broker or settlement planner (and/or their firm) does with that person at that point is offered up for discussion.
It is the opinion of this author that properly triaged, there is nothing wrong with simply referring business to another service provider.
For example, if someone needs an accountant and you happen to know of a good CPA or two perhaps you give the person the two names. BUT, do you then ask your accountant for a referral fee? If someone needs a lawyer to draft a will and you happen to know one or two perhaps you give the person two names. BUT, do you then ask the lawyer for a referral fee based on a percentage of his or her fee? If a non licensed lawyer or claims adjuster refers business to a structured settlement broker or settlement planner does that broker or settlement planner pay that person a fee? Not if you want to keep your license!
It is widely known that certain structured settlement brokers and settlement planners receive fees for referring clients to factoring companies. Some receive very large fees. If you deem it appropriate to charge a referral fee, do you disclose to the client referred that you are receiving compensation?
What specific actions does a structured broker or settlement planner undertake to justify their fee? Any fee earned by the structured settlement broker planner comes directly out of the the funds available to the individual selling their structured settlement payment rights, often because they have no other viable alternative
There is no contractual right to a fee from a factoring company. They are unregulated and it's completely negotiable. If the structured settlement broker or settlement planner tells the factoring company he or she wants a $3,000 fee that can be built into your quote, but is it disclosed? If your structured settlement broker or settlement planner does not take a fee THEN the money saved can be applied to give the annuitant a greater lump sum of cash to help the unfortunate situaton that they find themselves in.
What can you say about the ethics of a structured settlement broker or settlement planner who placed a structured settlement in the first instance, earned a big commission that he or she was contractually entitled to receive (based essentially on non-negotiable rates filed and approved by state insurance commissioners) and several years later THEN wants "the unregulated vig" on the same annuitant, or even a "call in" who has fallen on hard times. Do you throw a drowning person an anchor? That $3,000 fee might make a big difference in the person's situation. That fee alone might erase a substantial amount of debt for a person drowning in it. Is it OK to take a fee based on the flawed presumption "because everyone else is doing it"?
Given the recent Snyder expose in JG Wentworth's sales Present Value magazine, one naturally wonders if it is possible that structured settlement brokerage firms like Delta Settlements are complicit in skimming, or trying to skim a piece off the top of what their associates earn on these deals?
IS ANY FACTORING MONEY FLOWING THROUGH THE HOME OFFICE OF ANY STRUCTURED SETTLEMENT FIRM? Is there a firm whose associate sits on the NSSTA board of directors who either takes or requests that their associates pay them "a piece of the action" on these deals? If so, where is the disclosure?
If you have a structured settlement and consult a broker or settlement planner willing to refer you to a factoring company, ensure they provide an upfront written disclosure of their compensation before proceeding with the referral.
If they skirt the issue by saying "they share what the factoring company makes", please understand that their fee must be built in to the deal. In the pricing of these deals the factoring company discounts the payment (rights) that you are selling and then builds in its profit margin. If it has been fully disclosed AND you are agreeable to this, THEN you may elect to proceed. Please understand, however, that you will get a better deal if there are fewer hands out for your money.
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