Despite the conviction and incarceration of California insurance advisor Glenn Neasham for selling an annuity to an 83-year-old client, advisors are unlikely to curtail their annuity sales business, say several observers. Instead, they say the probable outcome is a more thorough suitability review that could take into account a senior’s mental status.
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The Neasham saga has generated a flurry of comments on LifeHealthPro.com and LinkedIn discussions about the case. Most readers express sympathy for the agent, although with the caveat that not all the facts of the case are known. Others questioned the wisdom of selling an annuity to a senior in her 80s. The role of state regulators, the prosecutor, the defense attorney and the carrier were also called into question.
But for advisors and agents working in the field, this case puts even more emphasis on conducting a detailed fact-finding review with senior clients, perhaps even delving into the individual’s medical history.
Said one commentator on LinkedIn, Paul Sebra, CLTC, and a registered rep, “I am curious about two things: Who complained and how was it established that there was a ‘cognitive’ difficulty? Part of my interview process with seniors is to get a list of prescriptions. If Aricept [a drug used to treat mild to moderate cases of dementia] or similar is listed or I suspect an issue, I ask, ‘Who is your Durable Power of Attorney?’ If they do not have one, I suggest that they get one. If they have one, I make sure to include them in the discussions.”
LifeHealthPro reached out to several commentators to get a further take on the potential impact of the Neasham case.
In an interview, David Saltzman, president of EmpowHR, Inc., in Columbia, S.C., acknowledges he is not privy to all the facts in this particular case, although he says “It seems as though the agent did everything he should have.”
Yet Saltzman agrees with Sebra that the case will likely mean a more diligent suitability review when dealing with senior clients due to the possibility of dementia.
“I don’t think for serious practitioners it will have any effect, other than perhaps to refocus them on an issue that is critically important when dealing with clients at all levels and with all product lines which is suitability,” Saltzman says. “I think most professionals I know are very thorough and this will just serve as a warning to delve even further.”
That suitability investigation, he suggests, may include an evaluation of the client’s medical history going forward.
“In the past, states have reviewed, approved or disapproved applications from insurance carriers where medical questions are asked,” Saltzman says. “I’m not aware of an annuity questionnaire that asks the kind of medical questions that you would typically find, for example, on Part Two of a life insurance application. If this is a concern for the state departments of insurance and the states are going to continue to provide oversight in this area, perhaps that is something they ought to discuss and proffer some regulations around.