There's no doubt that investment fraud is on the rise, and that older
investors are a prime target. According to a 2010 Investor Protection
Trust Survey, it's estimated that one in five seniors over the age
of 65 has been taken in by financial fraud, which adds up to $7.3 million
in the U.S. alone. Although many of the old tricks, like Ponzi schemes,
still work, many fraudsters are turning to new tricks to take your cash
and run with it. Variable annuity schemes are one of the newer ways unscrupulous
brokers and financial advisors are targeting senior investors.
What Is a Variable Annuity?
A variable annuity, like other annuities, is an investment through a contract
with a life insurance company and is used as a way to grow your assets
tax-deferred and/or receive payments over your lifetime. The variable
annuity is based on the performance of underlying investments.
What Goes Wrong with Variable Annuities?
A variable annuity can be appropriate for experienced investors who are
willing to take the risks, but many seniors are being sold these investments
as a "safe" way to bulk up retirement savings over a short period
of time. Unfortunately, the safety of many of these investments is misrepresented
or hidden under misleading statements.
It's important to understand that variable annuities usually:
- Come with high surrender charges
- Could have serious tax penalties
- Don’t have "Guaranteed" Returns, as returns depend on the market
- Are subject to high fees and commissions
- Are really designed for the long term, not the short term
Before putting your money into variable annuities, be sure you ask questions,
do your research, and understand what you're getting into and how
it will work in your overall financial picture. If you have lost money
on a variable annuity investment due to stockbroker misconduct, speak
with one of our experienced and helpful investment fraud attorneys today.
Meyer Wilson represents senior investors who have been the victims of
investment fraud nationwide.