Ameriprise annuity switching led to a $1.4 million settlement with regulators. Investors recommended that they exchange an annuity at Ameriprise of a new annuity should speak to a professional to determine if they were a victim of fraud.
Annuity switching is generally considered suspect. While some legitimate reasons do exist, they are rare. The primary reason is to make an advisor a commission. Annuities pay a very high commission. An investor not only surrenders an old annuity with an exchange, but also all the growth that the old annuity accumulated. As such, many state and federal regulators require extensive notice to investors before a switch can take place and view most annuity switches as inappropriate.
Ameriprise failed to have supervisory procedures in place to protect against such forms of fraud. The regulators stated, “Specifically, Ameriprise did not provide sufficient guidance to [brokers] for determining whether certain
customers would benefit sufficiently from the rider’s growth credit feature before commencing withdrawals to justify the higher fees, which applied for the duration of the contract.”
Jeffrey Pederson represents investors concerning inappropriate annuity sales for over 20 years.
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