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Here’s one for you. During a recent trip to the bank I was asked (for the 100th time) by the teller to talk with their investment representative. Before I could nicely object I was practically tackled by the rep and ushered to a seat. Since I was planning on retiring in a couple of months and had to make a decision about my pension and 401(k) options, I thought what harm could come from talking for 30 minutes? Boy did this turn out to be a costly mistake! At the conclusion of our meeting, he gave me his card and promised to “research my options for me.”
About a week later I received a big stack of paperwork from my employer directing me to make an election on whether I wanted a lump-sum distribution or a monthly pension? Coincidentally, that same day my phone rang and it was the rep from the bank. Coincidental? He called asking what I had decided to do. I told him I needed time to think about it and that I would call him. He told me he that had “researched” my situation and that he had “my paperwork” at his office and wanted to go over it with me. When I got there, he explained to me that the pension I was to receive “sucked,” because it wasn’t indexed for inflation and didn’t allow for any beneficiaries once I died. He kept telling me I could receive the same monthly amount from a variable annuity and still be able to leave something to my children. After much cajoling I agreed that taking the lump sum was the best idea. He told me that I would need to check the box indicating this election and that he would mail me copies of the paperwork and “call” me when the check arrived. Big mistake.
In the mean time, I continued to do some independent research and discovered that variable annuities have all kinds of problems and are not suitable for qualified retirement accounts. So I called the rep and told him that when the check came in that I wanted to come in and get it until I decided what I was going to do. Too late he told me, the check had already arrived a couple of weeks earlier and that it was made payable to the insurance company. I was livid. I told him I was coming down to get the check and straighten this whole mess out. When I got to the bank he wasn’t there. I waited and waited for over 2 hours fuming over this situation. The bank tried to help me by repeatedly paging him. No use, he didn’t respond. The next day I received copies of paperwork from the insurance company, “thanking” me for investing with them! I called the rep several times and only got his voice mail. I called the insurance company and they told me that they had received paperwork indicating my election to open an account. I tried desperately to explain what happened. They indicated to me that they were sorry, however, by reissuing me a check in my name I might become subject to commissions, penalties and taxes.
After a week of haranguing with the insurance company over this I finally did get a check made payable to me. I’ll have to let you know what happens with my taxes after I file next year. I am happy to say that I finally, after 2 months of sleepless nights, have resolved my problem. Needless to say, I am very, very wary of brokers who work on commission! In the end this whole problem was about the broker controlling the paperwork in order to make sure he received a commission from the insurance company.
W. Jackson
Detroit, MI
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