by John Darer CLU ChFC CSSC RSP CLTC
It's nice to see that S2KM and Patrick Hindert "go green"and recycle. Pat's review of the 2014 AAJ Annual meeting recycles his Primary Market Update from February 2014. It must be a slow structured settlement news day in Cincinnati.
In the eco-spirit of conserving bandwidth, I'll simply link to Structured Settlement Primary Market Update, my February 27, 2014 blog post which addresses the statistics to which Hindert refers.
Boiling down Hindert's message, "to grow the primary (structured settlement) market, structured settlement proponents must learn how to better market the benefits and applications of structured settlements to plaintiff attorneys and these other professional groups and associations in the context of evolving settlement planning marketing, work product, business standards and educational priorities.
This educational and marketing challenge requires all structured settlement participants to fundamentally "re-think" structured settlements and their own roles in personal injury settlement planning. One result should be consideration of a more unified marketing strategy to plaintiff attorneys and their clients among heretofore competing professional associations such as NSSTA, SSP and NASP".
I agree. However should we all have a problem where "unified marketing strategy" might mean a structured settlement agency or FMO, systematically providing annuitant contact details acquired by its brokers, to a publicly traded factoring company (when the annuitant has not approached them to sell their structured settlement) so that the factoring company can contact them, in exchange for monetary consideration per lead, or other financial backing? As I reported earlier this year, that such activity is purportedly occuring and that the purported revenue stream was purportedly significant enough to be included in a financial disclosure made to a private equity concern from which the purported company was purportedly seeking financing.
A number of settlement planners "originate"structured settlement factoring deals. Even more are putting their settlement planning clients in the position of investor in transferred structured settlement payment rights. There is no licensing whatsoever required to be in the structured settlement factoring business, no continuing education requirements and unlike any other financial service segment, there is no regulatory body that oversees how consumers in this underegulated niche are approached and solicited. There is absolutely nothing to define what activity, if any, is a conflict of interest. Is this a solid foundation for a "unified marketing strategy"?
Some banks and wirehouses are already in bed with structured settlement factoring companies, providing financing, facilitating securitizations and back up servicing of structured settlement payment rights, (primarily used where the annuity issuer will not dice payments in a partial transfer). I have seen first hand where the combination of a settlement purchaser and a financial advisor affiliated with a large bank, acted to cause a 29 year old father from Florida, with 2 toddlers, suffering from an obvious cognitive deficit, to sell all of his structured settlement payments amounting to $60,000 annually , his and his children's sole source of support, to the detriment of the annuitant that needed legal intervention to rectify. The financial advisor spoke to him about investing in mutual funds. Somehow the Florida judge, who did not meet the seller approved the transaction as being in his best interest and that of his dependents.
National news media is actively looking into the activities of structured settlement secondary market. The financial reporters who approached me with were both stunned and fascinated to learn about the licensing/regulatory gap in the secondary market.
Were NASP to lead an effort to create a licensing standard with enforceable rules akin to life settlements there would be an ever greater sense of legitimacy from which to build such a strategy.