What was he thinking?
In late September, John Hancock Life Insurance Company agreed to refund senior citizens $550,000—as well as make 145 additional penalty waiver offers to consumers and pay the state of Massachusetts $165,00—in order to settle allegations it failed to supervise one if its representatives.
According to the allegations, the representative developed an association with a mortgage broker from a separate company to induce senior clients to take out reverse mortgages and invest the proceeds in unsuitable variable annuities.
Unsuitable? Clearly yes, and in answer to the original question, he wasn’t thinking, at least not about the best interests of his clients.
It’s a particularly egregious example, yet ever-increasing regulation means it’s easy to get tripped up by even the best intentions, and why it’s critically important to prioritize client interests and product suitability.
“Although advisors and agents don’t think so often enough, good suitability is good business,” said Bob Seawright, chief investment and information officer for Madison Avenue Securities in San Diego.
As we all know, ensconcing proper suitability in law has been a long, slow slog. New rules came in years 2000, 2003, and 2006 which were then updated in 2010, with states required to be in full compliance by 2013.