Anybody who is in the annuities business knows that the business has a bit of a reputation problem. Despite the fact that annuities are a tremendous product for anybody who is serious about their own retirement planning, the market has had perhaps more than its fair share of embarassing regulatory moments, wherein shady operators mostly interested in lining their pockets at their clients’ expense have been caught acting, shall we say, not entirely in their clients’ best interests.
This has led to a lot of state insurance regulators squaring their gunsights on annuity producers as both the most likely source of predatory busines practices in their jurisdiction, and as the most likely way to score some easy points as a Defender of the Public. Catch a shady annuity producer in the act, be seen as a good guy cracking down on those insurance nogoodniks presumably lurking in the rose bushes outside fo your front door. That kind of thing.
And to be honest, there have been just enough of these kinds of rogues to make the entire industry look bad. And so, the vast majority of annuity producers who are playing by the book and trying to help their clients, get tarred by an awfully broad brush.
We saw this most clearly when the prosecutor for Lake County, California, dropped the hammer on Glenn Neasham a few years ago for selling an annnuity of questionable worth to an elderly client who, it turned out, was suffering from dementia. Never mind that the client’s companion approved of the sale. Never mind that the sale netted the client more than $40,000. Never mind that Neasham himself claimed he did not think his client was mentally impaired at the moment of sale, nor the lack of hard evidence proving that he did. Despite all of that, Neasham still was prosecuted for felony theft, and was convicted on it. He managed to stay out of jail by the thinnest of margins while his case was appealed, and even though Neasham ultimately maintained his innocence, his practice was destroyed and he and his family suffered a ruinous financial turn thanks to the long arm of the law.