Posts tagged #Settlement Planning

Should structured settlements be sold under a fiduciary standard?

So What is the fiduciary standard and why is it important to discuss in relation to how structured settlements are sold, marketed and explained to personal injury victims?

I’ll place a link to the definition of The Fiduciary Standard in the blog post or video description, but for purposes of this commentary lets just go with the most basic of explanations, that being a standard in which the adviser, broker or agent is required to put the needs of the client, in this case the personal injury victim, ahead of their own financial or professional interests, ensuring that compensation, sales trips, production requirements or other factors don’t interfere with the type of recommendation they are making when it comes time to allocate their settlement dollars into a plan which designs and income or future needs plan.

As it stands now there is really no clear duty as to what the adviser is recommending, as the sale of annuity contracts that fund structured settlements seem to fall into some great gray area where we don’t do suitability studies and there is no expectation or legal requirement for us to act in a way that our recommendations comport with those of a fiduciary standard.

It is my theory that this is going to change and change soon, due to pressures and outside requirements which to date, the structured settlement profession has been largely exempted from.

So if structured settlements are not sold under the fiduciary standard, than what standard are they in fact sold or recommended? Essentially all annuity and life insurance agents are held to what is known as the “suitability standard” in which the recommendation of the product only needs to be considered generally suitable, regardless of whether or not it might meet the stricter test of a fiduciary. As I mentioned last week in my discussion on transparency in pricing, if I am writing a non-structured annuity contract I am required to do an exhaustive suitability interview and questionnaire with the client to make sure my recommendation is suitable to their age, needs, investment risk and future requirements. No such requirement is imposed on structured settlement agents and brokers. Why that is the case is a big part of why I’m raising the issue in this commentary.

So, why is the fiduciary standards “ a thing” to even talk about, why not just keep on as we have been for decades? Why make this a problem when the profession hasn’t needed to address it previously? Well, you only need to look to the massive changes facing the annuity and mutual fund profession as a result of the Department of Labor deciding that in 2017 any advisor working on an IRA, KEOGH, 401K or pension plan MUST adhere to the fiduciary standard in their recommendations and offer dramatically expanded disclosure on commissions, fees and potential conflicts of interest. This trend is accelerating, whether or not that particular regulation stands under the new administration or not. Many of the largest fund, bank and investment managers elected to stay under that standard as they feel ultimately it is pro consumer and will be the de facto legal and administrative law standard going forward. In short the big bad world of compliance and law is catching up with the annuity profession and it is only a matter of time before structured settlements are swept into that category or agents are required to meet that standard in order to be licensed or appointed.

So what happens if structured settlements move to a fiduciary standard? Personally I think it would elevate the profession but it would also disrupt many of the current sales practices that are under examination, such as the AIG structured settlement program, approved lists, sales contests, trips, daily rate pricing and underwriting disclosure, adherence to HIPA standards and other elements that are currently common but not generally disclosed to clients in every case and situation, as there is no legal requirement to do so. None of these are big deals to fix or get rid of, but a lot of people in our profession object.

So why all the objections? In short because our profession has a history of preferring minimal disclosure, compliance and visibility. The Spencer vs Hartford case, The Weil vs Manufactures Life case and now the AIG class action all illustrate an unfortunate history of changing when forced by court order or some other outside agent or event. The objections against a higher professional standard will increasingly sound like the death rattle of a profession that is fighting a necessary change. Hopefully we as a profession elect to change before it is once again forced upon us from the outside and at great cost.

To learn more, contact Mark Wahlstrom at Wahlstrom & Associates. 

Wahlstrom & Associates announces partnership with Settlement Professionals Inc.


December 10, 2012:

Mark Wahlstrom, President of Wahlstrom & Associates, Scottsdale, AZ announced today that he and his firm will be partnering with Settlement Professionals Inc, of Portland, OR.

Wahlstrom & Associates, founded in 1982, is one of the nation’s oldest and most experienced plaintiff oriented structured settlement firms and has, during its decades of professional experience, been involved in some of the most innovative areas of settlements, particularly the development of mass tort, multi-claimant cases and the utilization of Qualified Settlement Funds in the claims and settlement process of these challenging cases.

The new partnership will provide SPI partners and member planners with unique access to the Wahlstrom & Associates brand, reputation and expertise in mass torts, administration and non-qualified settlements. Mark Wahlstrom will head up the new Mass Torts division for SPI and both he and his firm will be actively involved in the development and implementation of a state of the art process by which affiliated planners can confidently assist law firms to expediently process these complex cases, but also to individually assist the often thousands of claimants with their own financial and settlement planning decisions.

Wahlstrom & Associates is located in Scottsdale, Arizona and also has a national reputation in the areas of non-qualified structured settlements, such as structured sales, structured legal fees and structured oil & Gas lease bonus programs. Few firms have more years of diverse and demonstrated expertise in the structured settlement and settlement planning arena and the management and leadership of the firm looks forward to working with the SPI leadership to develop a firm with services tailored to the needs of progressive planners and designed for the next 25 years of the structured settlement and settlement planning professions.

Posted on December 10, 2012 .

What to do if you are offered a structured settlement to resolve your claim

In the second of our on going series on the basics of structured settlements, today I look at the question of what to do if you are offered a structured settlement as a means of settling your personal injury case or claim.

The video outlines the key topics, but Mark Wahlstrom goes over the essential basics:

1. If you are approached by a casualty or insurance company to settle your claim and you don't yet have a lawyer, GET A LAWYER first! You absolutely do not want to settle a case or claim with out the assistance of a qualified trial lawyer, but you would be shocked at the number of people in small to moderate claims that give it a try. Dont' do it, find a lawyer and if you don't know one contact us and we will help you locate one in your area.

2. Get a structured settlement expert to assist you in designing, pricing and planning your settlement and do NOT work with a broker for the insurance company. This does not mean that a defense broker is bad or incompetent, it just means that it is almost always in your best interest to have your own professional settlement expert working with you.

3. Take your time and consider the offer carefully and do not be rushed. Yes interest rates move and change, but that is no reason to make a hasty or incomplete decision on your settlement just because someone says interest rates might change. There is no need to rush and do not enter into any agreement in haste or under pressure.

4. Ask questions and make sure the plan fits for you. The first offer or design of a plan you see is just that, the first design. One of the great benefits of structured settlements is they offer almost limitless design and pricing options and you need to look carefully to make sure what is offered to you makes sense for you or your family.

Watch our tutorial on " What to do if you are offered a structured settlement to settle your claim" and if you need assistance on your case, contact Mark or Evan Wahlstrom at Wahlstrom & Associates, in Scottsdale AZ to help you.