Corporate Disinterest Could Limit Future Annuities Fraud

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There are two main goals for financial instruments for older Americans: maintain or increase the principal to provide stability, or guarantee monthly payments for a set period of time. Firms offering these products are declining to continue selling them and the net result could be a reduction in the possibility of investment fraud concerning annuities.

Companies that offer seniors these fixed-income investments take the principal paid in by the customer and invest them in the stock market or buy into bonds to generate a return on investment. However, a recent Bloomberg report argues that companies are backing out of the market because they lose money trying to meet their advertised goals.

To make up the difference, elder fraud lawsuit attorneys have alleged that some annuities rely on investments in risky vehicles such as the collateral debt obligations linked to the 2008 recession and financial crisis. Many seniors are unaware of these risks and expenses that may arise as fund managers try to maintain the principal through frequent trades and other costly maneuvers that do not always guarantee a positive result.

Still, the number of annuities fraud cases regarding the literature provided to consumers is not nearly as high as those regarding the sales of these investments. At least half of all cases in which people prey on seniors come from those in a position of trust, including long-time advisers and family members. The documentation regarding fixed-income investments may include the amount of risk seniors may expect, but for those without a background in finance, it is often common to rely on the expertise of a wealth manager or salesperson.

Yet even if there remains a minority of people willing to take advantage of seniors in those occupations, the overall drop in the number of financial products limits the opportunities for seniors to make decisions based on misrepresentations of the stability of certain types of investments.

Still, many older men and women may not have realized that they were at risk for this kind of fraud until they watched the value of their retirement portfolios plummet. It may be a sign of poor performance, but it could also be a sign that advisers sold products through misrepresentations.

If the latter is the case, consider consulting with one of our elder fraud lawsuit attorneys. A free case eligibility review with one is available at the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation.