by Structured Settlement Watchdog
Even Financial Advisors Are Not Fully Informed About Structured Receivables Investments
Allan S. Roth is the founder of Wealth Logic, an hourly-fee financial-planning firm in Colorado Springs, Colo. In 2012 he published the story of his experience buying a structured settlement annuity as an investment, or so he thought. His experience, although 6-7 years ago is instructive historically, relevant today and a statement about just how uninformed even financial advisors appear to have been about what they were buying and might have been recommending to their clients.
Roth mentions many times that he "purchased a so-called structured-settlement annuity". He didn't.
He purchased structured settlement payment rights or receivables. An annuity on the other hand, is an insurance product sold by licensed insurance agents.
Structured Settlement Receivables are neither an insurance product or an annuity as the National Association of Insurance Commissioners opined in a statutory issue paper in December.
Roth reiterates incorrectly that he bought an annuity multiple times in the article. Apparently of two minds, he also mentioned that he "agreed to purchase a cash stream" from MetLife of Connecticut, which company is(was) MetLife Insurance Company of Connecticut
Colorado Springs Financial Planner Allan S. Roth Concludes He Wouldn't Recommend Investments in Factored Structured Settlement Payments
Roth wrote "So after three excruciating months and dozens of hours of due diligence, I bought my first structured settlement annuity, and the whole process left a bad taste in my mouth. The work by the factoring company, the broker and the external attorney was sloppy at best. It seemed the broker’s sole focus and concern was to close the deal.
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OPINION Roth wasn't buying an annuity, but said he was and that tells you how even some advisors are bamboozled.
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If I was successful in catching all the errors in the documents, I bought an attractive cash flow from a highly rated insurance company yielding 5.625% annually. Yet there is a lingering doubt that I didn’t catch everything. Zweig (author of a 2010 article "Another Can’t-Miss Deal That Can Miss Spectacularly" which ran in the Wall Street Journal July 23, 2010), was absolutely right when he wrote that these deals are complex and can miss spectacularly. If my experience is any indication, that was an understatement. One thing’s for sure: I won’t be recommending them to others"
Consider that a financial advisor orchestrated a deal for structured settlement receivables to Pittsburgh retirees through Altium Group, which had acquired the rights from Corona Capital The deal was ultimately revealed to be fraudulent, only two years later.