home exercise program handout
Senior Abuse
Bestsellers AICPA CPE self-assessment Course-March 2008
Avoiding Circular 230 Malpractice Pitfalls and common abuses of small hot by Sid Kess
Author / Moderator: Lance Wallach, CLU, CHFC,
Publisher: AICPA
Extracts were taken from this book:
Senior Abuse
The following example is unfortunately not an isolated incident of abuse of sale. If accountants were consulted more often by their clients, perhaps the following would never happen.
Senior clients thought they had every reason to trust Mr. Sell BigPolicy as financial advisor. The insurance agent had obtained title to recognize it as WE DO NOT WANT NOT TO MENTION THE NAME Senior Advisor. He received this designation in 2002, a title he has secured the advertising leaflets sent to retirees.
He did not mention how easy it was to get that title.
He had paid 1095 dollars for a correspondence course, then took a multiple choice exam with questions like, "Marketing can best be described as follows:" (The Response: ". The process or technique of promoting the sale or distribution of a product or service) As more than 18,700 other applicants since 1997, he passed.
Insurance companies, eager for sales representatives, embraced Mr. Sell Bigpolicy because they have thousands of other advisers recently accredited.
The following year, several insurers paid him commissions worth $ 720 000 with his company retirees soared.
But many of those sales came from steering older Americans into wise investments, regulators contend in a lawsuit.
Mr. Sell Bigpolicy denies any wrongdoing, but one of its customers – a widow support 73 years for a son with Down syndrome – said he deceived into buying complicated insurance contracts that left her unable to pay dental bills home repair.
"His office was filled with things saying he was certified to help seniors" said client. "The only one he really helped himself. "
Financial support of Americans age is a huge and potentially lucrative field, and the market is growing. Attracted by the market, many financial planners have shifted their priority for her – and make very different attitudes and professional training to the consultation table. Training and certification in financial gerontology is now offered by at least four groups.
The Securities and Exchange Commission does not regulate these groups – or any other group that provides an attestation financial planning, too. "The SEC does not endorse any professional designation," said Susan Wyderko, director of the Office of Education SEC Investor
The absence of state control is a problem, said Stephen Brobeck, Executive Director the Consumer Federation of America. "There is a possibility of fraud," he said, adding that the elderly should be very careful who they trust for advice.
Regardless of any government planner, the SEC and consumer organizations say the best approach is "buyer beware."
Investors can learn to check the background of a financial planner, including disciplinary action, the SEC website, www.sec.gov . These checks history, and a discussion about how to approach an adviser to investment, are well informed before signing with a planner.
"We see too many investors who could avoid problems," Ms. Wyderko of the SEC said, "if they had asked basic questions from the beginning. "
Mr. Sell Bigpolicy is one of tens of thousands of financial advisors Hand in hand with insurance companies to come to the aid of older Americans impressive sounding credentials.
Many of these titles can be obtained within days of the undertakings concerned with the bottom line and a sound similar to established powers which require years studies, tests and extensive background checks difficult.
Many graduates of these short programs say they do want to help older Americans. But they are often distribution financial advisers who are not qualified to offer, advocates for people Seniors say. And thousands of them are paid by some of the most important country of insurance to sell elderly clients complicated investments that some economists say most retirees should never own.
More than two dozen programs now exist, and have enrolled more than 39,000 people during the last decade.
But some existing programs, which are often associated companies insurance agents have learned to use abusive sales techniques, regulators say.
Some insurers have been listed as sponsors at seminars with names like the Million Dollar Academy, where thousands of sales representatives were invited to scare retirees by saying, "I am all that stands between you and potential catastrophic loss." Other seminars instructed agents drive a wedge "between retirees and their advisors in place.
"Insurers are happy to turn a blind eye to what salesmen are doing, as they make a sale, "said Attorney General of Minnesota, Lori Swanson, who has several companies, claiming that their products are, at best, inappropriate, and perhaps worse.
Insurance companies say investigate the background of all agents, screen all sales to consumers to ensure they are appropriate, and ended with representatives of poor selling practices. These companies said they were not aware of abusive methods taught at any seminar they endorsed.
Some insurance companies say they do not tolerate misrepresentation.
Another insurance company, in a statement, said: "Any evidence of sales agent misconduct, without exception, results in immediate termination. "
Nevertheless, complaints on sales of insurance products have soared. In particular, the complaints have come from the sale of annuities. Obviously, from time to time a purchaser of a product he buys, without a complete understanding of the product. If the product does as expected, perhaps because the stock market has declined, the buyer may have a selective memory failure. The buyer can then complain to the insurance company, among others. If the seller has sold in good faith, and the product is appropriate, sometimes the buyer can always have recourse. Is this fair?
More than a third of all cases of financial abuse of elderly have pensions, according the North American Securities Administrators Association, a regulatory group [EM1]. Hundreds of lawsuits have been filed against insurers on sales pension for the elderly. A judge in Minnesota ruled in 2007 that a single class action suit against a large insurance company could cover much of 400,000 applicants. That all applicants deserve to be compensated? Which ends much of the money if the case is won? If you do not know the answer to the last question, ask yourself if it's a huge coincidence that the class action litigation attracts prestigious large law firms as a picnic does not fly.
In interviews, sales agents who were accused of acts reprehensible that they have always followed the advice of insurance companies.
But consider, for example, that the vast majority of annuity sales do not offer immediate gains. Instead, they require buyers to wait as long as 10 years to start receive benefits. These contracts, known as deferred annuities, up 97% of all annuity sales last year.
Deferred annuities, however, offer sales agents the richest commissions, which is one reason so many of them are sold each year, regulators say. The sale of a $ 100,000 deferred annuity, for example, typically earns a sales representative $ 9,000, if buyers are sometimes forbidden to touch much of their money for 10 years without incurring penalties. No-load annuities, may have little or no commission, and perhaps no sanctions. Annuities with shorter tie ups carry much smaller commissions.
In summary, it is true that sales agents growing large deferred annuities with long periods following are attached as works councils, which can also be a negative comment on companies as agents.
"An annuity that pays a fixed immediate income offers seniors a variety of security," said Jean Setzfand, director of financial security with AARP. "But a deferred annuity is almost always a bad idea retiree. "
These concerns, however, have not stopped many insurance agents from aggressively selling annuities deferred.
Some of these agents have been trained by organizations that require only a few days of teaching classroom.
For example, the 1,200 people who enrolled in another program of Senior Advisor only spent four days in a classroom, according to a spokesman.
The organization that gave Mr. Sell Bigpolicy his credentials is a company profit that has trained 24,000 participants since its launch in 1997.
The company that gave Mr. Sell Bigpolicy designation has a course that lasts three and a half days, according to participants in recent years, and includes elevation lectures, overviews on the sociology of aging and exercises, including looking through the blurred vision lenses to get an idea of how the view of some clients may weaken.
Authorities control tend to be highly critical of these programs.
"There are phrases being invented to give unlimited an expertise in senior finances, "said the Massachusetts securities regulator William F. Galvin. "Most of they seem designed to encourage seniors to listen to crooks. "
Most sellers of insurance are honorable and are not crooks. As in most lines of work, however, not everyone is honorable and do the right thing.
A representative the organization said during the program and questions were written and evaluated by experts. In a statement, the company said his training was intended to supplement, not replace, professional qualifications and education. The organization began asking owners title in March to disclose to potential customers that this designation not only means experience in finance, health or social issues.
Despite this warning, the company has trained thousands of insurance agents and other financial advisors. And about 100 companies, including many insurers, approve the appointment, said a spokesman for the group.
Soon after Mr. Sell received his Bigpolicy appointment, Mr. Sell Bigpolicy started to show ads and letters inviting retirees to seminars over free chicken lunches, according Massachusetts regulators.
At these meetings, Mr. Sell said they were retired Bigpolicy dangerously close to disaster Financial, according to Massachusetts regulators and participants. He warned that the stock market's ability to offset inflation was "a big lie, "according to documents obtained by regulators. Banks are" weapons of mass destruction, "read a document.
But annuities, Mr. Sell Bigpolicy noted, offered guaranteed returns, participants said. At the time, he was authorized to sell annuities offered by more than two dozen insurance companies, state records show.
Mr. Sell Bigpolicy script, regulators Massachusetts is, the materials used in any other training company who had more than a dozen insurers as "partners" or "carriers" on the website of the company.
There are just a dozen companies, such as training company in question, that teach sales agents how to find pensioners willing to buy annuities.
Some insurance companies say they argue that training programs that are committed to ethical sales tactics and that their support is often limited to providing speakers or equipment marketing. But they acknowledge they can not always police how they arise.
Dozens of lawsuits against insurers contend that these companies did not adequately supervise sales agents who sold inappropriate annuities to aging clients and then did not act when buyers complained.
Some insurers, in court documents and interviews, say they spend millions of dollars supervision sales agents and investigating consumer complaints.
Some insurance companies and certain regulatory State changed the rules governing how annuity sales agents can behave.
This year, Massachusetts prohibited most financial advisers from using certain titles unless they have been recognized by an accreditation body or state. In 2007, two of the largest insurers told sales agents they could not use the designation of WE DO NOT WANT TO MENTION senior advisor.
But in most other states and most insurance companies, sales representatives can use any what title they choose.
For his part, Mr. Big Sell politics, as he awaits the outcome of his case, is authorized to sell rents by more than two dozen insurers, according to state records. This is not an isolated example, which does not mean that an accountant has to think that all sellers of insurance sales behave like that person. This example, in different versions, it happens. If the client has consulted with his accountant, most of which are not true, the example above, or something like it, can not occur.
Lance Wallach, the Corporation National Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on pension retirement, financial and estate planning and abusive tax shelters. He wrote about 412 (i), 419, and plans captive insurance. He speaks to over ten year agreements, written over fifty publications, is regularly quoted in the press and has been featured on television talk and radio shows including financial NBC, National Pubic Radio's All Things Considered, and others. Lance has written numerous books, including the protection of customers against fraud, incompetence and fraud published by John Wiley and Sons, Bisk Education CPA's Guide to Life Insurance and the Federal estate and gift taxes Taxation and the AICPA bestsellers, including avoiding the pitfalls Circular 230 Malpractice and Common Abusive Small Business Hot Spots. He does expert testimony and has never lost a case. Contact him at 516.938.5007 or visit wallachinc@gmail.com title = www.taxaudit419.com/TaxHelp.html "> Www.taxaudit419.com/TaxHelp.html" and www.taxlibrary.us
The information provided herein does not include legal services, accounting, financial or any other type of advice for any specific individual entity or otherwise. You should contact an appropriate professional for such advice.
About the Author
Lance Wallach, captive insurance and Section 79 plan expert, is the nation’s leading authority on resolving IRS tax problems for individuals and businesses.
Mr. Wallach, National Society of Accountants’ Speaker of the Year, is a member of the AICPA faculty of teaching professionals and he is a renowned national expert witness in many 419, 412i, and financial abuse cases. To date his side has never lost a case.
Mr. Wallach is often a featured speaker at national conventions for CPAs, attorneys, and business owners and other entrepreneurs, and has over 30 years experience helping people get the most possible money back from the IRS. He can be contacted at 516-938-5007 or wallachinc@gmail.com, or visit www.taxadvisorexperts.org or www.taxaudit419.com for more information.
Lance Wallach is the author of many best selling accounting, taxation, and financial books, including:
- Protecting Clients from Fraud, Incompetence, and Scams
- Wealth Preservation Planning by the National Society of Accountants
- The CPA’s Guide to Federal and Estate Gift Taxation published by Bisk
- The AICPA’s The Team Approach to Tax, Financial and Estate Planning
- The CPA’s Guide to Life Insurance by Bisk CPEasy
- Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots by the AICPA author / moderator Lance Wallach