Scapegoat or Con Artist: You Decide -

Glenn Neasham seems like a nice enough guy. He worked hard, and it sounds like he sold a lot of index annuities. He did well for himself and family selling annuity products that could be a tad hard for many people to understand and calculate. (For the record, I have no problem with successful agents who sell suitable products to suitable customers.)

All was well until 2008, but it wasn’t AIG, Lehman Brothers, crap mortgages, fire or brimstone that did in Mr. Neasham. No, 2008 was the year Mr. Neasham met a senior citizen named Fran Schuber. Fran arrived at Mr. Neasham’s office with her boyfriend Louis Jochim, who years earlier had purchased an annuity from Mr. Neasham. According to reports, Mr. Neasham escorted Fran and Louis to her bank to make a $175K withdrawal from Fran’s account. Fran purchased an index annuity and signed all disclosure forms needed for compliance purposes. (A bank employee promptly reported the transaction to the bank’s compliance department.) By signing the disclosure forms, Fran verified she understood the annuity contract’s features and penalties. So what’s the problem here? If a customer signs the disclosure documents, isn’t the customer responsible for the purchase?

Ah, this is where it gets interesting. Turns out that Fran was diagnosed with dementia in 2004. So at the time of sale four years later, should an agent, or any other person, have determined that something wasn’t quite right with Fran? I’ve sold annuities to seniors for years. Heck, I have a 98-year-old grandmother who’s still kicking, and I positively know when a transaction should or shouldn’t be done. Moreover, if she was diagnosed in 2004, how many years prior did she show symptoms? Listen, mistakes and oversights do occur and maybe Fran should just get her money back and Mr. Neasham return his commission to the insurer. We should all pretend that the transaction didn’t happen and everyone should go on their merry way, right? Nope.

The state of California fought hard to bring this case to trial. Mr. Neasham says he’s spent his entire savings fighting this case. In the end, after a huge expense of money, time and anguish, Mr. Neasham was found guilty of felony theft and was sentenced to 90 days in jail. And almost overnight, Mr. Neasham became a villian in the opinion of senior citizens and a victim and scapegoat in the opinion of the index annuity industry at large.

The annuity industry believes Mr. Neasham had no evidence of Fran’s history of dementia. The woman came to Mr. Neasham’s office on the advice of long-time satisfied customer Louis. He owned an index annuity and he thought an index annuity would yield Fran more interest than her bank account. But if everything was so crystal clear, why did Mr. Neasham have to escort the two seniors to the bank? Couldn’t Fran have written a check or delivered a check soon thereafter? Or did Mr. Neasham think he better get involved or this transaction might be lost? Either way, I think there is ample doubt about how to interpret this transaction.

I do have some questions for Mr. Neasham. Here’s one: how did he hold himself out to the public? Did he call himself a financial advisor or planner? Or did he hold himself out as an annuity salesman or annuity specialist? In my experience, no one markets himself as an annuity agent. They are “retirement specialists,” “senior advisors” or “income planners,” to name a few.  If Mr. Neasham had a “planner” or “advisor” type of title, then I definitely have an issue with him. Being a planner or advisor connotes a deeper understanding of the client. Kind of like having fiduciary responsibility not just for the transaction but for the client’s welfare. However, if Mr. Neasham simply called himself an annuity salesman or specialist (which is highly doubtful), then I would find in favor of Mr. Neasham.

When you tally all the data here, the absolute bottom line is, an unsophisticated 83-year-old woman should not be purchasing a complicated index annuity. Sell the client a fixed annuity with few moving parts that are simple to understand. Or here’s an idea: maybe customers should be required to take a 10-minute quiz on the fundamentals of their purchase. I’ll tell you what, if I was an index annuity agent, I’d be creating my own customer quiz as we speak.

Pay-it Forward:

I love the “Job Lot” type dollar stores for the prices, of course, but also for their uniqueness. I save money shopping there and I truly have a good time. Where else can you buy steamed chestnuts in a bag? Maybe we can share this mentality with our youth. Having fun while saving money has always been a motto to live by!

Earl E Bird

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

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