Boston-based LPL Financial has been sued by two Nebraska investors in a class action alleging the sale of unsuitable variable annuities in their retirement accounts. The lawsuit alleges that the firm's broker, Bob Bennie, made material misrepresentations regarding the nature, suitability, and appropriateness of a variable annuity within an IRA or qualified retirement plan. Court documents prepared by an attorney for the investors claim that Richard and Carol Ripley purchased $366,500 worth of the annuities. The case was recently moved to federal court.
As I explained in an earlier blog post, claims against brokerage firms relating the sale of variable annuities has increased dramatically. Far too often, brokers recommend their clients purchase a variable annuity due to the high commissions the brokers receive on the sales; they one of the highest commissioned products a broker can sell. The commissions that securities brokers receive for selling variable annuities are just too much for many brokers to resist. The commission received on the sale of a variable annuity is likened to the length of the surrender period. In other words, if the surrender period is 7 years (the average) the commission paid is approximately 6 -7%. The commission ranges between 4 and 8%, typically.