Several months ago, an agent approached me with an ethical concern. Formerly affiliated with a large FMO, he claimed its advisors were telling seminar attendees to expect a 4 to 6 percent return on their annuity purchases, despite the typical 2 percent payout with competing products. What’s more, he alleged the FMO was benchmarking its annuity contracts’ performance to a 3 percent bond and S&P 500. However, instead of illustrating a current, lower-yielding annuity, it compared those investments against a higher yielding annuity from more than 10 years ago, strengthening the case to buy its offerings.
The agent brought his misgivings to the FMO’s owner and top producers. But this just created bad feelings, ultimately sparking a cease-and-desist letter from the FMO’s attorney. Unable to square his ethical values with what he perceived to be the FMO’s deceptive sales practices, he moved to a competing organization.
Granted, I just heard one side of the story, and perhaps the FMO had legitimate reasons for illustrating its annuities that way. But I understood why the agent was concerned, and I admired him for leaving on his own terms.
How would you have responded? Report the violators to regulators as I suggested last month? Team up with other advisors to launch your own shop? Quit and join another FMO? Difficult choices, but the key is to ACT! And that takes moral courage.