by Structured Settlement Watchdog
I've been provided with a copy of a Milestone Consulting email blast to trial lawyers that states "Eliminate annuities from your client portfolios and settlement plans".
A Game of Chicken?
The Buffalo, New York firm is tripling and quadrupling down on its assault on annuities while upon information and belief, it retains the appointments with all but 3 of the life insurers issuing structured settlement annuities. Milestone is not appointed by USAA Life Insurance Company, United States Life Insurance Company or American General Life Insurance Company. One wonders whether Milestone's leadership is simply playing a game of chicken with Metropolitan Tower Life, Independent Life Insurance Company, Pacific Life Insurance Company, Berkshire Hathaway Life Insurance Company of Nebraska, United of Omaha and Prudential gambling that they won't terminate his appointment and/or he fancies himself as a poor man's Ken Fisher.
It seems with a number of things written and posted by Milestone these days, that the devil is in the details. Readers may wish to review some of my posts within the last few months that provide what is, in my opinion, essential critical commentary.
Milestone says "Who wants to pay a 4% commission for an asset that yields 1.7%? Milestone provides no cite of start date or duration, rated age, or context. One clue. In his January 11, 2020 blog, Milestone CEO John T. Bair used 1.6% and indicated it was for a 10 year immediate annuity. What would be the yield over a longer period of time? Milestone's headline says it all. The example Milestone uses for justification is intellectually dishonest in my opinion. When you start adding up the costs of Milestone and affiliated companies' qualified settlement fund, the cost of the assignment fee, the asset management fees, the trustee and/or custodial fees, what is the effective cost?
Today the 10 year bond is at 0.55, 20 year bond is 1.04% and taxable. One of my colleagues recently got a 3% IRR from New York Life with a daily rate and I have a quote for an 11 year old boy, with no rated age, on a 30 years certain and life that is 2.95% IRR. 3%, 2.5% and even 1.7% betters an investment in the S&P 500 from January 1, 2000 to December 31, 2019 by someone who missed the 20 biggest trading days in the market, according to data compiled by JP Morgan in its 2020 retirement guide. That's the 20 biggest days over 20 years folks! See How Structured Settlements Compare.
As to the 4%, if Bair stated in January 2020 that "we have placed $2 billion+ worth of structured settlement annuities". If that can be substantiated, with a few pro bono special exceptions that would mean that Bair and/or the companies he is/was affiliated with, earned about $80,000,000. in the alternative, some might argue that the an annual asset management fee of 1.5% annually for an unmanaged portfolio is overkill. Who wants to pay 1.5% annually for something like a factored structured settlement payment stream that earns a gross rate in the neighborhood of 3%?
You Say You Want a Revolution?
This statement by Milestone Consulting makes no sense "We believe that clients benefit greatly by directly owning the stocks in their portfolios, which includes their structured settlements and settlement plans"
- Is Milestone stating that structured settlements are securities?
- Is Milestone stating that settlement plans are investments?
- If a plaintiff or attorney were to directly own the funding assets of their structured settlement, what are the tax consequences to them? Where are the tax rulings that substantiate this?
The words "eliminate annuities from your client portfolios and settlement plans", compounded by the fact that Bair has admitted in writing to being a factoring originator, begs the obvious question about whether Milestone is itself, or together with entities of common ownership , seeking to cannibalize or churn its own business. Milestone has been heavily promoting the commonly owned factoring firm CrowFly LLC and factored structured settlement payments streams to investors using the tertiary structured settlement market scam label "secondary market annuities" as part of its FeeMaster campaign.
In the words of Lennon and McCartney:
"Well you know
We all want to change the world
You tell me that it's evolution
Well you know
We all want to change the world
But when you talk about destruction
Don't you know you can count me out"