Citizens Financial Unit Investigated for Sales of Savings Product Controlled by Troubled Financier Greg Lindberg
April 4, 2023 by Mark Maremont and Leslie Scism
Massachusetts securities regulators said they are investigating a unit of Citizens Financial Group Inc. over its sales of a savings product offered by an insurer controlled by now-indicted financier Greg Lindberg.
News of the probe follows an article published this week in The Wall Street Journal, which reported that tens of thousands of people, many of them retirees, had a total of $2.2 billion of their money frozen since 2019 amid the implosion of Mr. Lindberg’s insurance empire.
Click HERE to read the full story via WSJ
Wink’s Moore on the Market: I am not going to rehash the whole deal.
I WAS interested in the commentary about the one annuitant who purchased a $400,000 annuity, and wished he would have purchased two $200,000 annuities at Colorado Bankers Life, instead.
I was taught that the coverage, in most states, was $250,000 per COMPANY.
I am researching the issue more.
I am wondering if we will hear about the RIA and marketing organizations that this insurance company had proprietary deals with?
At the end of the day, my big takeaway from all of this is that THIS MESS does NOT help the case for annuities.
This does not encourage RIAs to consider annuities. This is not conducive to adoption of in-plan annuities. It certainly doesn’t make the case for CONSUMERS to explore annuities!!
Even if you THINK you know annuities, you need to stop. Think.
Have I done THOROUGH due diligence on the insurance company? What do their financials look like? What are their financial strength ratings? What is their historical treatment of inforce renewal rates like? How is their service? Is there a considerable likelihood that the insurer may be sold, or offload an inforce block to a reinsurer, which could potentially materially change the responses to ALL of these questions?
And only THEN- have I done my due diligence on the annuity product? What are the liquidity provisions? The death benefits? Is there a market value adjustment? Are their riders with charges; if so, how are they calculated and how frequently are they deducted? Are there any other types of charges? What is the maximum that those charges can be increased to?
And ONLY THEN- have I done my due diligence on the interest crediting on the product? What are the minimum guaranteed rates/caps/pars; maximum spreads? Are there investment restrictions? Can more than one “moving part” be used (on indexed annuities)? Is there a charge for any buy-up caps/pars; how high can that charge go? Is the rate considerably higher than peers? If so- WHY?
So many argue that you do not need to be an RIA to act in their clients’ best interests.
And I agree.
However, ignorance is not an excuse for 99% of this.
Do the work. -sjm
