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Articles Posted in Annuity Switching

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Marc Korsch (CRD #5525226) has been employed by Centaurus Financial, Inc. since February 2014. Korsch was registered with the following firms: Trustmont Financial Group, Inc. from March 2011 to March 2014, Capital Financial Services, Inc. from July 2010 to March 2011, Variable Investment Advisors, Inc. from April 2010 to July 2010 and Gradient Securities, LLC from July 2009 to April 2010.

Christopher Robert Hickman is Sanctioned by FINRA on elderfinancialfraudattorneys.comAccording to the FINRA BrokerCheck, there have been complaints against Marc Korsch.

In 2018, while employed by Centaurus Financial, Inc., Claimant alleges that recommendation of annuity switches are unsuitable and that the fees, surrender penalties/charges and annuity terms were not adequately discussed.

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Investment Center Broker Accused of Stealing $300K from Elderly Client on silverlaw.comLeon Vaccarelli allegedly defrauded a total of nine clients out of more than $1 million

In May, former financial advisor Leon Vaccarelli was charged with 12 counts of fraud and money laundering in a federal court in Connecticut. If convicted on all of them, he could receive a maximum penalty of 210 years in prison. After pleading not guilty, Vaccarelli was released on a $100,000 bond.

Vaccarelli is alleged to have stolen money from several clients between 2011 and 2017. During that time, he reportedly informed his clients that their money would be invested in different places, including money market accounts and retirement products. What Vaccarelli actually did, according to investigators, was put the money into his own account and use it to pay his own expenses. In addition, federal prosecutors also say that he also used client money to make interest payments to other investors.

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Of all the guarantees, bells and whistles associated with variable annuities, perhaps the biggest guarantee is the steep up-front commission the financial advisor can earn for selling the product.

According to a recent Reuters’ article, variable annuity sales in the U.S. totaled $142.8 billion last year, and brokers can earn 7 percent or more in commissions on the insurance products.  Based on simple arithmetic, the commissions earned on an annual basis exceeds a billion dollars.

However, investors may be damaged when these complex products are not properly explained, tax or liquidity factors are not considered, or the advisor engages in “twisting” of improper annuity switching.  “Twisting” happens when a broker encourages a client to trade in an older annuity to buy a different one, often at significant cost to the client and benefit to the broker.

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Be prepared, the Securities Exchange Commission (SEC) warns investors, “to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity is right for you.“ Investor education is the key to making informed investment decisions, but what questions should be asked? Investors must rely on their advisors because the variable annuity prospectus, frequently 100-plus pages, or more, is convoluted and not easily understood by the Average investor. The SEC recently issued an Investor Tip: Variable Annuities, What You Should Know publication to provide direction for investors.

Variable annuity contracts are considered by many investors complex which leads to their reliance upon the financial advisor who recommends the investment. The terms of the contract which investors should be familiar include:

  • surrender period;
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