NASD’s recent life settlement investor alert is both bad news and good news for advisors who do these transactions. The bad news: The alert may discourage seniors from considering the benefits of selling their life policy. The good: It may lead to more informed buyers, which may help discourage illegal or unethical settlement practices.
“Life settlements are not for everyone,” said NASD chairman and CEO Mary Schapiro in announcing the new senior alert. “While they can be a valuable source of liquidity for people who no longer want or need their current policies, life settlements can have high transaction costs and can have negative consequences for (a client’s) financial situation.”