Bruce E. Cox, A New Jersey accountant, has been flogging factored structured settlement payment rights as " discounted designer annuities". In a 9 minute YouTube video posted August 1, 2012, entitled " Discounted Designer Annuity paying more than 3X* the 10 Year U.S. Treasury". It is more than 50% the way through the Bruce Cox video, before there is any mention of an assignment of structured settlement payment (rights).
Acquired structured settlement payment rights ARE NOT annuities. Labeling them as such is inaccurate. What a pity that CPA Bruce Cox uses his professional credentials to spread the falsehood.
"Designer Annuities provide a steady reliable income you can count on. So if you are stuck in the 1% to 2% world of Bank CDs or the 2% to 3% world of long term Treasuries, you can become unstuck and enjoy the safe income streams offered by these discounted designer annuities. Your money will grow faster and/or you will have more of it to spend with the higher yields offered by our designer annuities.
They are issued by top rated insurance companies, names that you know. Many of these companies have been around for 100 years or longer.
(1) Bruce Cox CPA misleads investors by implying that factored structured settlement payments are annuities and that factored structured settlements are issued by insurance companies. A factored structured settlement is created by the transfer of structured settlement payment rights through a complicated legal process that has much more risk than buying regular annuities. Sometimes the payment rights are bought and sold multiple times among investors through a servicing company.
(2) Investors in structured settlement payment rights DO NOT receive the equivalent standing as the original annuitant in the event of insolvency or liquidation of the insurer. Case in point is the liquidation of Executive Life Insurance Company of New York, a New York insurer that is in the process of liquidation. While the purchase of structured settlement payment rights may be an appropriate asset class for some, the lack of statutory protection in a worst case scenario may be of concern to some investors. It must be disclosed up-front.
(3) The sales and solicitation of both annuitants and investors is virtually unregulated. unlike the sale of real annuities, which can only be sold by licensed insurance agents appointed by the life insurers that issue the structured annuities. With the so called " designer discount annuities" there is no licensing, no self regulatory organization, no enforcement of federal truth in advertising laws, and no oversight other than a judge overseeing the transfer from the original annuitant and whose role is primarily to protect the seller, NOT the investor.
(4) There is nothing designer about buying structured settlement payment rights. It's more like a used car lot. Some of the "used car lot owners", who have servicing arrangements, can "slice and dice' pieces of payment streams to suit cash flow needs , but that moves you even further away from the regulated annuity.
There is simply no need for cutesy labels for the acquisition of structured settlement payment rights. Call it what it is.
- a June 2012 version of the video claimed 7X the 10 Year Treasury