Why Variable Annuity Investments Are Often Fraudulent Investments

Strong advocates for investors throughout the country who have been misled

Variable annuities are often touted as excellent investment opportunities because of their tax deferred benefit. In truth, these are often high-risk products that can cause investors significant harm. The stockbroker negligence attorneys at The Frankowski Firm have a strong track record of success in bringing claims against brokers and firms that fail to put the investor first. Our firm brings claims against financial advisors who push variable annuities without regard to the needs and goals of the investor.

What are the disadvantages of variable annuities?

Because variable annuities allow an investor to choose how much of a risk to take, they offer some level of freedom to investors with a higher risk tolerance. However, they have a number of drawbacks that make them poor choices for most investors:

  • Because these are long term investments, they are generally illiquid.
  • They often come with a number of hidden fees and expenses, including surrender charges, sales charges, tax penalties for early withdrawals, mortality charges, etc.
  • They offer fewer tax benefits than the average 401(k)
  • Because these are usually high commission paying products, your broker may have an incentive to convince you to buy them, even though they may not be appropriate for you.

Brokers who sell variable annuities to clients without informing them of the potential risks, the fee structures or the disadvantages may be held liable for any losses sustained by the investor.

Examples of variable annuity fraud

Stockbrokers can earn high commissions by selling variable annuities, which makes these types of investments enticing to them. This can lead to twisting, a practice where a broker convinces a client to replace an annuity policy from one company with an annuity from another company, or churning, where brokers generate excessive commissions through the trading of policies.  When twisting or churning occurs, the surrender charge period starts all over again, making the new annuity even more illiquid than the old annuity.

Brokers may also attempt to manipulate their clients into purchasing variable annuities by using overly complicated legal jargon, promising “one day only” bonuses, failing to properly disclose the risks associated with them, or misrepresenting their actual training, education and abilities in regards to the financial field. Using these “tricks” to defraud seniors out of their retirement savings is especially egregious conduct.

At The Frankowski Firm, our stockbroker fraud lawyers help investors recover damages after they have been swindled by unscrupulous brokers or investment firms. If you purchased a variable annuity and have sustained losses, we may be able to help.

Make an appointment with a professional securities arbitration litigator today

Attorney Richard Frankowski has been fighting for investors who have been cheated or ill-advised for more than 15 years. His legal team takes the tough cases. Our variable annuities lawyers understand how hard investors work to save funds for investing and how much they rely on financial advisors to give them competent advice so they can retire early, help pay for a child’s education, travel, address health issues, or just enjoy life. Call our firm today at 888-741-7503 to speak with a skilled variable annuity fraud attorney. You can also complete our contact form.