Variable Annuities a Source of Client Dissatisfaction

A recent Wall Street Journal Wealth Advisor report from Kevin Noblet states that, excluding stocks and mutual funds, the type of investment that is most likely to make a client unhappy enough to take a broker to arbitration is a variable annuity. In fact, while claims involving other products were declining in 2012, variable annuity cases were rising. Lawyers for investors say advisers are too often selling them to elderly clients for whom they aren’t suitable. And even advisers who think they have a place in many client’s financial plans–for wealthy clients who have maxed out their 401(k)s, for instance–are critical of their complexity. “There are too many moving parts,” says Michael Fein of CIC Wealth Management in Baltimore. “The people who represent them don’t understand what they are representing.”