Ex-Lincoln Financial agent is lead plaintiff in Texas lawsuit over insurer’s FIA sales
May 15, 2023 by John Hilton
A former Lincoln Financial agent is the lead plaintiff on a Texas lawsuit alleging that the insurer misrepresented the potential returns with its OptiBlend fixed indexed annuity.
Former agent Henry Morgan and eight other plaintiffs, all Morgan’s clients, signed FIA contracts in February 2020, court documents say. Plaintiffs say Lincoln led them to expect the consistent 6% gains illustrations showed.
Click HERE to read the full story via INN
Wink’s Moore on the Market: Here is some more on that lawsuit involving Lincoln Financial Group and Fidelity Investments, thanks to John Hilton and InsuranceNewsNet.
********Looks like the agent is the lead plaintiff in the case!********
Can you believe that?!? I don’t know that I’ve ever heard of that?
My stream of consciousness on this piece-
This is an illustration issue, not necessarily a hybrid index issue.
The basis of the case is that the insurer led clients “…to expect the consistent 6% gains illustrations showed.”
The illustration showed the client gains of 6%, but they received 0%.
Not that I don’t empathize, but the illustration does say that “PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.” Seriously- why would an agent that sells indexed annuities BELIEVE the non-guaranteed elements in the illustration were gospel?
Is this guy just seeing deep pockets?
This statement got me pretty riled up:
[The lawsuit calls the lack of interest crediting] “…significant and meaningful damage for retirees and individuals living on a fixed income that looked to the defendants to provide not only a place for protection of their principle, but an opportunity for growth potential.”
The agent knows that indexed annuities have the potential to earn 0% interest. HE SHOULD HAVE PITCHED A FIXED ANNUITY, WERE THIS SUCH A CONCERN!
This reads like an unsuitable sale, if you ask me.
That said, this part concerns me:
“The lawsuit claims a Lincoln marketing consultant ‘made several oral representations to Henry Morgan and, on information and belief, made the same misrepresentations to other brokers, agents and customers, that when the market was no longer in the bull direction a return would still be generated because of the dividend stock mix in the index.'”
If we are talking about indexed annuity features, while referencing stocks, we are dancing with unregistered investment advice, in my opinion. (SN: punishable by fines and even jail time in some states) Let’s not give any opportunity for the client to expect market-like returns, folks!
It looks like Lincoln made some very valid points in their response. I don’t know that the agent/plaintiffs have a leg to stand on in this case.
TAKEAWAY: “Industry analysts and many regulators agree that illustrations are problematic and unrealistic.” – sjm