Red Flag Reminder

Regulators Target Medicare Advantage Sales Practices
If you sell Medicare Advantage plans or advise your clients about buying them from other agents, watch out. That’s because regulators and lawmakers are zeroing in what they believe are abusive sales practices and even considering supplementing federal oversight of the market with a limited grant of more...

Health Insurance Scammers Return
They’re back . . . health-care hucksters that attempt to part your clients from their health-insurance premiums. If the U.S. economy falls into a recession, you’ll probably be seeing more of them, so warn your clients now. more...

Senate Committee Targets Unsuitable Reverse Mortgages
Reverse mortgages are a beneficial tool for seniors who wish to convert their home equity into cash for living expenses or long-term care. In fact, according to the National Reverse Mortgage Lenders Association, this income-generating strategy has become increasingly popular, with lenders issuing more than 107,000 federally insured reverse mortgages in fiscal year 2007 more...

Join, Don’t Fight, the Senior Protection Movement
Regulators and lawmakers are ramping up efforts to protect seniors in response to increasing levels of senior fraud. But rather than view these efforts as yet another regulatory burden, financial services companies should recognize opportunities to build stronger relationships with senior clients and leverage existing technologies and processes. more...

NASAA Updates Investment Advisor Best Practices
The North American Securities Administrators Association (NASAA) has issued an updated set of best practices to help investment advisors stay in compliance. Given the current regulatory environment, advisors should take these guidelines seriously. more...

Caution Urged in Wake of Latest FINRA Sweeps
FINRA—the Financial Industry Regulatory Authority—is executing two new industry “sweeps” that suggest high standards of ethics and strict compliance are more important than ever.

The first sweep, announced in September 2007, is to examine whether brokers are using so-called "professional" designations to mislead and defraud investors. more...

Watch Out When Recommending Early IRA Withdrawals
The Financial Industry Regulatory Authority (FINRA) is examining sales practices that suggest clients make early withdrawals from IRAs in order to make new investments. Broker/dealer representatives who encourage prospects to withdraw their IRA money prior to age 59 1/2 under Section 72 (t) of the IRS code may attract close FINRA scrutiny, according to published reports. more...

Consumers at Risk from Unregulated Private-Equity IPOs
Private equity and hedge funds firms have unleashed eye-popping wealth for their owners. But financial advisors should warn their high-net-worth-clients not to assume these wealth-generating engines will enhance their wealth should they participate in a private-equity or hedge-fund initial public offering. more...

Regulators Zero in on Zero Premium Life
Regulators in Texas, Georgia, and North Carolina have warned agents to be careful when recommending so-called zero premium life transactions—or those with names such as “Estate Maximization” or “No-Cost-to-the-Insured” policies. These are forms of stranger-owned life insurance, and may potentially involve insurance code violations for rebating, improper inducements, misrepresentation, or other deceptive sales practices. more...

Will Your LTC Clients Get Their Claims Paid?
Several major long-term care insurers are in the media spotlight for allegedly denying legitimate long-term care claims. According to the New York Times, thousands of seniors have filed complaints or brought suit against LTC insurers for making it difficult, if not impossible, for them to receive benefits more...

Seniors Warned about Life Settlements
NASD’s recent life settlement investor alert is both bad news and good news for advisors who do these transactions. The bad news: the alert may discourage seniors from considering the benefits of selling their life policy. The good: it may lead to more informed buyers, which may help discourage illegal or unethical settlement practices. more...

The Perils of Giving Investment Advice without a License
If you’re not licensed to sell investments, think twice about advising a client to cash out a security in order to buy an index annuity or other insurance product. That’s because state securities regulators are more frequently sanctioning insurance agents for acting as unlicensed investment advisors. more...

Regulators Warn of Slippery Oil and Gas Deals
Insurance and financial advisors should advise clients to be wary of oil-patch scams—and should promote these deals only after doing careful due diligence themselves. According to the North American Securities Administrators Association (NASAA), state regulators have more...

Feds to Sharpen Focus on Identity Theft This Year
Identity theft will be in the spotlight in 2007, as the President’s Identity Theft Task Force seeks public input on how to reduce the incidence and impact of America’s fastest growing crime.  If you haven’t talked to your clients more...

PPA Spells Big Opportunities for Qualified Advisors
The $7 trillion defined-contribution retirement plan market got a serious shot in the arm when Congress passed—and President Bush signed—the Pension Protection Act (PPA). Under the new law, employers will be allowed more...

529 Savings Plans on Regulator’s Radar
If you sell 529 College Savings Plans, now is the time to tighten your sales practices to assure client suitability. That’s because both the NASD and the SEC are cracking down on violations in sales of these popular programs. more...

Selling to Seniors: Approach with Caution
We’ve all heard the saying, “You never get a second chance to make a first impression.” This is especially true when it comes to contacting seniors.  Yet agents and advisors continue to misrepresent themselves when they approach senior prospects, sparking complaints and government scrutiny. more...

Broker-Dealer Compliance: The Good, The Bad, The Ugly
State securities examiners put 228 broker-dealers in 28 state jurisdictions through their paces this past spring.  The result of their compliance reviews? The identification of 654 deficiencies in five areas: books and records (49 percent of the deficiencies), supervision (22 percent,) sales practices (16 percent), registration and licensing (7 percent), and operations more...

A New Era of Senior Protection
Two former South Florida agents were sentenced to 25 years in prison for their roles in a Ponzi scheme that bilked more than 30 investors, some of whom were seniors, out of $1.2 million.  Thomas A. Masciarelli and Steven Petrarca were sent to prison for selling annuities to clients, then advising them to cash out to buy a real estate investment offered by their own company. more...

Medicaid Planning: Proceed with Caution
After Congress passed—and President Bush signed—the Deficit Reduction Act of 2005, many observers wondered what would happen to Medicaid planning and to the sale of “Medicaid friendly” insurance products. If you took a hard line on this issue—either viewing DRA as a death knell or as no big deal—it’s time to take another look. more...

Talk Straight When It Comes to Industry Designations.
If you have an industry designation, you need to be careful how you represent those letters to your prospects and clients.  That’s the lesson learned from the recent spate of bad publicity about “senior specialist” designations. more...

Life Settlements: Bringing New Options to Life.
The life settlement business is growing fast.  According to Conning Research and Consulting, the business of selling unneeded life policies grew to $5.5 billion in face amounts in 2005, up from $3.3 billion in 2004. Bernstein Research cites higher in-force numbers ($13 billion in 2005), with potential growth to $160 billion. more...