by John Darer® CLU ChFC MSSC RSP CLTC
Matt Bracy's video podcast with the above title airing on Sequence Media's Factoring Channel raises a few interest points. My comments follow.
A. Factoring companies must advertise because there is no list of annuitants available for sale.
Bracy gives this answer in response to the question "For a relatively small marketplace, structured settlement factoring seems to be everywhere on the internet, TV and radio. Why is that?"
The known (by me and as yet by unnamed by me) actively appointed structured settlement general agent who made such an offer of the agency's book in the presence of 4 individuals from a particular factoring company might beg to disagree.
The factoring company representative from another company who received multiple unsolicited approaches by several structured settlement brokers in between 2010-2012, to sell their annuitant information might also beg to disagree.
A number of factoring companies cull court records for information about annuitants. Its as easy as pie. One need only go to a state court that has online records, identify all cases by factoring company. Then you request the records for a nominal copying charge. or you can download them if the Court provides such facility. I was able to download a case record less than a week after it was posted when doing my research and obtained phone numbers, addresses, copies of releases. The lawsuit between RSL Funding and JGWPT even addresses this because it was alleged that JGWPT is redacting the contact information to hinder its competition.
Yet even with the low acquisition cost manna potentially available the recent home page evidence shows that Rescue Capital still delivers the same questionable advertising message of "Why wait?" as:
- Solid Funding (associated with Settlement Quotes, LLC) "Why wait for your money?"
- Sovereign Funding "Why Would You Want to Wait for Your Structured Settlements , Annuity or Lottery Winnings?
- Peachtree "You shouldn't have to wait for your payments to arrive" and TV ads featuring a man geting older waiting for payments to arrive at the mailbox (when the reality is that payments are often made electronically.
(all current as of April 21, 2012 2pm EDT)
Bracy, who is President of the National Association of Settlement Purchasers, opines that "to the extent anyone in the factoring business is marketing by denigrating the value of structured settlements, I think that is wrong, short-sighted and incorrect"
B. Difference in Target Market between Structured Settlement Industry Segments
From Bracy's catbird seat, he observes that the traditional target for structured settlement business for the primary market is the plaintiff attorney, the defense attorney and the claims adjuster while the secondary market targets its ads to annuitants themselves. It's an interesting observation however, a number of structured settlement brokers and settlement planners market to plaintiffs directly. While plaintiffs place trust in their attorneys, those that have access to computers, IPADs, Smartphones, NetTVs and the like. are more likely than not to seek out information on the Internet, initiate calls to structured settlement experts and retain a greater degree of authorship over their settlement planning decisions than ever before. A plaintiff who brings an IPAD, laptop or smartphone to a mediation can instantly obtain information about the adversary's expert
C. Selling Both Sides
Bracy seemed to imply that structured settlement brokers and settlement planners should be more actively involved in both sides of the structured settlement equation. Pioneers like Chairman MAU are already involved in not just two sides but three sides of the equation:
- Structured settlement annuity placement
- Partial or full liquidation of structured settlement payment rights.
- Re-marketing or repositioning such structured settlement payment rights to investors or other plaintiffs
With few exceptions, structured settlement annuity issuers have to date shown indifference towards this business practice. One of the industry trade groups has had Chairman MAU on its Board of Directors for the past 2 years. Is handling mutiple facets acceptable or not ? If it is acceptable, how about setting some marketplace standards? Note that the NSSTA, which includes most of the major structured settlement annuity issuers as members, has taken the position (since late 2006) that it is not consistent with its mission.
D. If factoring advertising is hurting structured settlement brokers’ sales, that ultimately hurts factoring too. What can be done?
Brarcy states "Structured settlement brokers and annuity issuers need to stop pretending that factoring doesn’t exist, or that it is “evil”.
Bracy believes that a discussion about factoring should take place at the time the structued settlement is created. Even if it does, I don't think it stops the TV advertising or other marketing channels.
In my opinion, based on discussions I've had with participants, most of the people in the primary market today, are publicly or privately accepting of the role that factoring plays. I am less certain that a majority take an active role in answering questions or counseling people. Right or wrong, the business of structured settlement factoring is regulated by judges. But the judges have ZERO control over the advertising and marketing practices of factoring companies and structured settlement brokers involved in factoring, unless a business practice is questioned in their courtroom.
An insidious practice that demands a solution
"Wet ink" structured settlement factoring deals (in which a structured settlement is factored within months of creation) result in significant capital losses to annuitants. While Allstate Life Insurance Company and Allstate Life Insurance Company of New York will not permit a commutation for the first 2 years of a structured settlement existence under its AFEN, some factoring companies are seeking and/or taking on deals within weeks or a month of creation and judges are approving them.
What should be examined is:
- How many of these "wet ink" deals are being done and by whom? Who is actively seeking out these deals?
- Who is getting compensated on these deals, and how much they are being compensated on the backs the injury victim? The lack of transparency must be cured.
- How many of the "wet ink"sellers were sucked in by the questionable " Why wait for your payments?" advertising message.