Over the past several years, a number of banking institutions have been involved with the sale of variable annuities to retirees and senior citizens. These sales take place through their FINRA-registered broker-dealer affiliates, such as Uvest (First Niagara Bank), Key Investments (KeyBank), COO (Citizens Bank), and M&T Securities (M&T Bank).
Through branch offices in the Buffalo, Rochester, Syracuse, Utica, Binghamton, and Albany areas, many customers of sizeable bank-custodied IRA accounts or CD accounts have been recommended to liquidate such holdings for the purchase of variable annuity contracts – but are variable annuity contracts suitable for retirees?
As reported in previous blogs, while variable annuities are not always safe and secure investment vehicles, they are often presented to be so. Variable annuities can decline drastically in value with market fluctuations. Also, annual carrying costs for administrative fees, mortality fees, insurance-related expenses, investment management-related expenses, administrative expenses, and other costs approaching 3% per year can certainly eat into whatever income your variable annuity investments might be generating for you. Additionally, variable annuities come with considerable sales commissions paid to the selling firms and their brokers, which can approach the 7% and 8% range.
When faced with a variable annuity sales pitch from a bank-affiliated brokerage firm, it is important to ask who is really profiting from the sale. Bank customers are often lulled into a sense of security, oftentimes being sold variable annuity products in the same location where their bank deposits have been held, believing that their variable annuity contracts are just as safe as their bank account deposits – they are not!
If you feel you have been victimized with the improper sale of a variable annuity contract, we offer a free initial consultation to assess your case.
The Law Offices of Timothy J. O’Connor is one of the only law firms practicing securities law in the Tri-City Capital District of Albany, Schenectady and Troy. We also represent victimized investors throughout the rest of New York State, including Buffalo, Binghamton, Syracuse, Watertown, Utica, Kingston, New York City/Manhattan, Long Island, and everywhere in between, as well as in the surrounding states of Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.