What's the matter with Structured Settlements?

In this week's edition of Speaking of Settlements, national structured settlement expert, Mark Wahlstrom, looks at some of the empirical data on structured settlement premium written, interest rate trends and the shrinking number of life markets involved in the structured settlement market. 

Mark's conclusion is that there are some fundamental problems in the structured settlement profession as evidenced by shrinking premium, diminished interest from life markets and an aging and static based of structured settlement brokers actively engaged in the profession. Money for nothing-structured settlement brand is lost

The myth that structured settlement annuity sales have shrunk as a result of lower interest rates is exposed to some degree by the fact that fixed annuity and income annuity sales for the rest of the financial planning industry are up, even at record levels, for certain lines, all with the same interest rate levels the structured settlement profession use as an excuse for poor results. It begs the question as to why structured settlement sales have declined 20% over the last two years, when the rest of the financial service industry is seeing gains of 6% to 15% on similar lines over the same time period. 

If interest rates can not be blamed for this drastic decline, then what is at work in the structured settlement profession to cause such severe drops in premium?

Mark's answer is that the structured settlement brand name has been taken over by the factoring profession and that it is now going to be almost impossible to salvage the integrity of the product in the minds of consumers. The steady drum beat and message that implies that a structured settlement is something to be rid of, ( "It's your money, and you want it NOW!") has polluted the minds of NEW potential clients to a degree that they all wonder why they would ever want to be in a structured settlement when it appears that everyone is trying to get out of one. 

Obviously, those in the structured settlement profession are well versed on the value, importance and integrity of the structured settlement, but as Mark Wahlstrom warned repeatedly over the last five years, the settlement profession's pathetic budget to counter this adverse message from factoring companies has doomed the profession to the loss of it's brand identity with potential newclients.

Listen to this week's edition of Settlement Expert TV and watch for next week's discussion on the implications of the lost battle for the mind's of new customers and what brokers, planners and attorney's can do to manage their professional practice going forward. 

Does selling a structured settlement to a senior citizen expose agents to criminal prosecution?

A recent court case in California should give pause to virtually every structured settlement planner, agent or broker in the country as it seems to indicate that the sale of annuity products to seniors or claimants with impaired decision process could lead to criminal prosecution.

In this weeks “ Speaking of Settlements “ video broadcast, Mark Wahlstrom looks at the recent case of annuity agent Glen Neasham, a 52 year old annuity agent in California, who was recently convicted of felony theft charge and sentenced to 90 days in jail for selling a $175,000 annuity to an 83 year old woman who prosecutors alleged exhibited signs of dementia at the time of the sale. He was prosecuted under what are broadly referred to as “Elder Abuse” statutes that cover not only physical or nursing home abuse, but increasingly exploitation of seniors in the decision process of handling investments, savings and financial planning. 

The article, written by WSJ staff reporter Leslie Scism, does an excellent job of covering the facts of the case and looking at the issues involved. You can read the full article by clicking here.

However, in this weeks broadcast Mark Wahlstrom elaborates on how this might impact structured settlement planners, annuity agents and others who deal with anyone over the age of 65. A great number of laws have been passed that REQUIRE banks and other’s to report suspected elder abuse or inappropriate influence in the planning or sales prospect, as happened in this case, making the likelihood of other such cases being pressed in other states quite high.

Some of the issues at stake here for structured settlement planners going forward are:

• If state laws now indicate that any person doing planning over the age of 65 is considered elderly and is thus covered under these statutes, do planners and agents need to take particular care in dealing with anyone 65 or older if recommending a structured settlement annuity?
• If the compensation for annuity sales in the form of a commission is going to be used to establish “criminal intent” as was the case in the Neasham prosecution, are there additional disclosures necessary on how an agent is compensated when dealing with any impaired claimant or senior?
• How might this decision impact the structured settlement factoring business? If the high cost of “getting out of the product” is used as evidence of harming the clients, as it was in this case, what does this say about factoring company advertising and inducements to “ get your cash now” when it causes demonstrated financial loss to claimants in many cases to proceed down that path?

We anticipate there will be a great deal of follow up on this case and others like it around the country and we will continue to follow it and comment on how it might impact structured settlement sales and consulting moving forward.

Wahlstrom to speak at Society of Settlement Planners annual meeting

The Society of Settlement Planners is taking an innovative step forward in how they are handling their annual meeting this year in Las Vegas, NV. The three day event, which starts April 29th and runs through May 1, is open to anyone who is interested in or currently working in the area of structured settlements, settlement planning or providing investment or funding programs for the settlement profession.

Mark Wahlstrom Society of Settlement Planners Conference from Sequence Media on Vimeo.

What makes this unusual is that they are including annual membership in the organization as part of the event fee of $800, creating an unusual value at a time where convention costs, CE events and hotels for meetings such as this are becoming ridiculously expensive. They will be hosting it at the Vdara Hotel on the Strip and from past experience this is a great location for a meeting of this type as it is removed from the casino floor or monster convention hotels that make it almost impossible to network with attendees at the event.

Mark Wahlstrom will be speaking on the topic, " So you think it's bad now?", a look at the last five years of the structured settlement profession and the challenges facing settlement planners and the industry moving forward, among them:

• The reality of a continued low interest rate environment for the next 24 to 36 months, which has a huge impact on fixed rate, long term payment products such as structured settlement annuities.
• Continued and accelerating advertising and marketing by the secondary settlement market, aka factoring companies and the confusion that advertising has created with claimants and others about what the structured settlement product really is
• A circle the wagons and burn the infidels mentality among the entrenched structured settlement firms regarding alternative products for the the structured settlement market.
• Looming pressure and marketing from banks, trust companies, investment managers and others that sell against our product.
• An almost complete failure by our profession to effectively market our services and brand due to limited budgets, commitment and follow through at our associations, provider companies and major settlement firms.

Still, with all of that said, amazing opportunities continue to open up each and every day to partner with other professionals, expand markets, elevate our brand and profession if we would only raise our sites to do more than settle old scores and hold on to the tiny slivers of market share we have left.

Watch this little preview video and consider attending the SSP annual this year for an agenda that will cover a wide range of topics, speakers and ideas as we once again attempt to kick start the growth of our profession so that we can better serve injured and hurting people who need our advice and expertise.