by Structured Settlement Watchdog
Correcting the mislabeling of structured settlement payment rights or structured settlement derivatives as annuities is moving in the right direction.
"The payment stream is an existing, fixed receivable or derivative".
"When the original owners of payment streams sell their future payments for cash today, a secondary market annuity derivative is created. Furthermore, it is simply an existing payment stream, transacting in the secondary market". -SMA Hub website home page March 11, 2017. The word "derivative" was only added very recently.
Unlike Genex Capital, which amusingly attempts via its Assured Annuity website, to justify its use of the term on the basis of Merriam Webster's Annuities for Kids definition, Portland Oregon based SMA Hub has a taken a step forward which underscores that "secondary market annuities" ARE NOT annuities.
SMA Hub claims that the term secondary market annuity "has become an industry standard" referring to a factored structured settlement, previously owned annuity or in-force annuity. "Santorum" became a standard for a while too. A factored structured settlement is not an annuity. Bear in mind again that SMA Hub attempted to trade mark Secondary Market Annuity and got blanked by the USPTO.
Just because a collective bunch of profiteers in a sub industry have perpetually colluded to use a scam label that doesn't make it right, particularly in some cases where the same firms have a life insurance license and sell retail annuities and use the names of trademark brands and logos to sell their non-annuities. One firm that I spoke to says they've used the term only to compete with SMA Hub and firms using the term in their name. The potential for confusion to individual investors is real when you consider that intermediaries market to yield starved seniors and their financial advisers, including some settlement planners.
For example SMA Hub, at least one of whose principals is a licensed insurance agent, makes the following statement in its buyer's guide which is simply not true.
"SMAs offer all the benefits of a primary market, period-certain, guaranteed annuity — while offering higher returns with the same low risk".
In general, structured settlement derivatives (what SMA Hub has been labeling SMAs) DO NOT offer all of the benefits of a primary market structured settlement annuity.
- Not buying a regulated insurance product, making an investment in factored structured settlement payment rights.
- Questions exist whether structured settlement derivatives with the scam label "secondary market annuities" have the same statutory protections as regulated insurance products.
- An investor may have inferior tax consequences to an injury victim, wrongful death survivor or workers compensation recipient who is receiving a structured settlement paid as part of his or damages recovery.
- Much lower transaction risk with structured settlement vs structured settlement derivative.
It is possible that any companies or financial advisers, including settlement planners, that continue to use the term secondary market annuity (or the plural secondary market annuities) to describe structured settlement derivatives in their sales pitch, runs the risk of financial blow back if or when an investor loses money on a deal where a court order is vacated.
Case in point The Altium Group and veteran Pittsburgh financial advisor Paul D'Allesandro on the Wall case, where the elderly investors lost $153,000 as the result of a vacated order (vacated 2 years after the original order when judge determined it was procured through fraud). Both the intermediary and adviser were sued by The Walls. The outcome of the Maryland Attorney General's action in the Baltimore City lead paint cases threatens to have a financial impact on some companies using the scam label. A 66 year old woman who bought one of these deals through Somerset has had payments suspended pending the outcome of the litigation with a $150,000 investment at stake. Who knows how long that will take?
it is critical to note that when a structured settlement transfer order is vacated, this is NOT due to a default of the insurance company that issued the annuity underlying the structured settlement derivative. However, continued usage of the scam label secondary market annuities will likely lead to confusion by consumers and the media who may wrongfully associate annuities with what is not an annuity.