As part of our monthly series of interviews and podcasts on the topic of factoring and secondary markets for the sale or liquidity of structured settlements, we are presenting the first of a four part educational podcast on the history, basic tenants and process of liquidating a structured settlement annuity. This process is alternately known as factoring, liquidity brokerage, settlement benefits purchase and "cashing out" future payment streams.
Matt Bracy is general counsel for Settlement Capital, one of the originators of the market, and he generously gave us several hours of his time to do a four part series discussing factoring and secondary markets. Check out his bio information in our recent guest area.
There is a huge amount of misunderstanding as to how this market works, who participates in it, how lawyers and their clients can determine the best path to follow in deciding what to do when someone wants to get out of their structure. The biggest single hurdle to learning how this works is the fact that many times settlement annuity brokers refuse to provide information in how to get out of a structure, as they believe that people shouldn't be cashing out of their annuities, and conversely, the internet is virtually littered with advertising and promotions by factoring companies thinly disguised as settlement planners working desperately to show people how to cash out of their annuity. Unfortunately this leads to a situation where no one gets accurate information on a decision that can have dire and lasting financial implications to those trying to decide the best path.
If you are a trial lawyer, paralegal, financial planner or settlement planner this month long series is going to be mandatory listening and reading, and I invite your participation on the discussion boards or on the postings. We will be discussing what factoring it, where it came from, how to choose a broker and the risks to insurance companies and settlement brokers in avoiding working with annuitants who are searching for assistance in getting liquidity from their contracts.
We will also be doing a parallel series on company issues, specifically the entrance of certain life markets into the factoring business and the response of NSSTA and other trade associations to these companies which they feel are writing annuities on one hand, and then providing liquidity and making money on the other hand. A complex and controversial issue.
Finally, we will be posting and pursuing a separate series on the ethical implications to planners and brokers in providing information to their clients. Patrick Hindert has already started this discussion on his S2KM blog, and we will be using several interviews he did on this topic to start a discussion in that area.
A wonderfully complex issue that has hidden in the shadows, with many facets and areas of discussion. Make sure you are watching and listening.