JENNA
LOS ANGELES,#2Consumer Comment
Tue, October 05, 2004
Just a few comments of clarification...... I do not work for Keyport but I am an agent who sells variable annuities. Something that is very frustrating in this business is not only cleaning up the messes of inadequate fellow advisors but more so the ignorance I see amongst clients. I very rarely see a client participate in the education of the product that they are purchasing. I constantly see the eyes "roll over" so to speak as I'm outlining the details of a particular investment.Some of these products are not rocket science but can be a little complicated and require the consumer's concentration.I demand that my clients know their products inside an out whether they like it or not (and because of situations like this letter). When I came across this complaint I truly felt the need to clarify some differences between being "ripped off" and being a consumer who was affected by unfortunate market timing and lack of product understanding(as to not mislead consumers). Nothing in the complaint truly had anything to do with "Keyport Finanical" (although the investments that they offer in their subaccounts are not outstanding they still had average 10 year return of 5-8% annually) or "SunLife" itself. First of all....a 1% service fee (industry standard) is a percentage of your returns that is retained for portfolio management costs- not unfair OR abnormal from any variable annuity or mutual fund. Secondly....subaccounts are chosen at purchase, at which time each fund available for investment within the annuity is disclosed to the client- YOU HAVE EVERY RIGHT TO RESEARCH THESE SUBACCOUNTS (you even have to sign for them-which is something that should never be done without regard). Their avarage annual yields are even made available to you with your materials. If these returns are not to a clients satisfaction it would be at this time BEFORE purchasing the contract to decide you would like to look into an alternative annuity (with funds that offer higher return potential). Money markets within mutual fund companies and variable annuities are NOT (I repeat NOT) meant to be competitive or compared to bank money markets EVER. They are not the same thing. If you are looking for short term liquid cash by all means go to a bank and do not purchase one through a VA-you will be disappointed. They serve a specific purpose for each unique investor but generally get used as a vehicle for avoiding market fluctuation (as a part of an overall strategy for your portfolio). Also, transferring between these investments more than once in a 30 day period is excessive ("referred to as market timing"). You cannot time the market-simple but the hardest idea for investors to comprehend. Even in the middle of the World Trade disaster the worst thing for an investor to do is panic and sell all their stocks (something that was becoming an epidemic which is why many companies including Keyport put limitations on excessive trading/market timing). Third....the fact that the seven year term/surrender schedule was not realized until after the contract was received in the mail is a huge sign that this particular investor didn't pay attention to what he was purchasing. The first thing I would want to know when I'm investing is..what is my commitment on time? Is it liquid? Can I withdraw whenever I need to? And the bottom line is.....the regulatory agencies who govern the purchases of these contracts require that all this information be disclosed on the application before purchase and signed by the client. These complaintts listed in the letter all could have been avoided by asking questions and paying attention to the annuity application being signed. These things are not hidden and NOT difficult to find. Again, its not rocket science. Last.....unfortunately with the declining period in the stock market alot of investors felt burned. Even ones who knew the "market risks" that were being taken on but when reality struck and we finally did go through a bear market it left a bitter taste in consumers mouths. Stories like the one in this letter do a gross diservice to consumers who can benefit from variable annuities/mutual funds (but unfortunately hear stories like these and do not understand that the fault isn't with the product but the person who didn't take the time to understand it). Lesson learned should be...PAY ATTENTION. Like I tell my clients, if you don't comprehend the product then go over it until you do (ask me again,go to a family member you trust, get a second opinion, call the company or ask a friend-anything). I think our investments deserve as much attention as the cars we buy!!!!! You don't buy a car and let your eyes glaze over when the sales person is talking about annual interest, warranties or gallons per mile. Then why do that with your nest egg?