Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Executive Life of New York Liquidation: Am I Idealistic?

by John Darer CLU ChFC CSSC RSP

Several Executive Life of New York structured settlement annuitants called me yesterday and the lawyer for another this morning. One received a letter stating that he/she would continue to receive structured settlement payments without reduction while the other received a benefit reduction notice that said a reduction to under 60% of the scheduled benefits was proposed. While ELNY structured settlement annuitants have been receiving 100% of payments as scheduled, the possibility that some annuitants could be receiving reductions has been known to members of the structured settlement industry for some time. The extent of those reductions has only been known to the majority of the industry since the 1.15 filing in November.

One of my readers expressed concerns that Executive Life of New York annuitants who live outside of the New York City Metropolitan area are not being adequately notified.  For example, weekly notices are to be published in the New York Times and Wall Street Journal, but are these notices going to the editions that are published outside of the New York City Metropolitan area?  Both of my callers reside outside of New York state. One of them, who found me via Twitter, remarked how little information has been available and that because the mailed notification, when it finally arrived, was in a "spammy looking envelope. It might have easily been confused with mail bringing offers to buy payments and discarded".

Other than Pat Hindert, Mark Wahlstrom and I nobody in the structured settlement industry is tweeting, posting to Facebook, YouTube, or appears to be providing information on their company websites on ELNY.

• The National Structured Settlements Trade Association (NSSTA) provides extensive information about the ELNY Liquidation to its members but offers no public repository of information on its website.
• The Society of Settlement Planners (SSP) offers no public information about the ELNY Liquidation on its website.
• The National Association of Settlement Purchasers (NASP) offers no public information about the ELNY liquidation on its website. A number of the calls I have received are from people who have invested in Executive LIfe of New York structured settlement payment rights.

Noting that some members of the first two actually brokered and placed some of the affected parties into ELNY structured annuities (and they, or their companies, are still active members one or more of the associations) these people, companies and associations are encouraged to do something more public. At the very least they should consider providing a link to ELNY.org Commonly Asked Questions , the FAQ on Executive Life of New York on their websites or blogs. How about it?

Even if you did not write any ELNY structured settlement annuities, like me, or were not even in the structured settlement business at the time ELNY was operating, like me, perhaps you can volunteer a little pro bono time to field some calls and provide some compassion to people who need it.

I spent an hour of pro bono time this morning listening, answering questions and speaking with two affected by the ELNY Proposed Restructuring:

A father whose child was placed into an ELNY annuity as the result of the settlement of his case against a hospital 25 years ago. The son is facing a 43% covered scenario. The child is now 36. Think of the possible issues beyond the ELNY situation and provide value and expertise.

A caller whose payments represent compensation for the loss of parent when the caller was a child. It's not just about the shortfall letter. It's about what the money represents and being able to articulate that which may not be clear with a level of understanding and compassion that many of those in the structured settlement and settlement planning industry are trained to do.

I've told anyone who calls that they are welcome to call me again.

Recaptured Settlement Streams Hitting the Mainstream (a/k/a In Force Structured Settlements)

I've got to admit that positioning yourself as if you were the "shelter for battered structured settlements"  is a creative marketing strategy. 

I was pleased to obtain a copy of a September 13, 2011 approach letter that the loquacious President of the Society of Settlement Planners sent to a plaintiff lawyer in which he stated:

" After much discussion on the topic, we decided that we did not want our feelings about the factoring industry to deprive our clients from an income replacement option that could pay them as much as 50% more than the current interest rates available from traditional  structured settlement annuities. We now have a way to go into the  secondary marketplace to "recapture" these previously-owned investment-grade settlement streams for new clients who will gladly give those payment streams a new, loving home".

 When you're down and troubled
And you need some loving care
And nothing, nothing is going right
Close your eyes and think of me
And soon I will be there
To brighten up even your darkest night

cue James Taylor "You've Got a Friend"

Whether you call them recaptured investment-grade settlement streams, in-force annuities, structured settlement retreads or recycled structured annuities, in my opinion the concept of using secondary market cash flows to finance a portion of a plaintiff's future needs is a valid one in some circumstances. The strategy can be used on a stand-alone basis or in conjunction with traditional structured settlements. Yet because that segment of the industry is unregulated (there is no license requirement for the factoring company that arranges the deal or the brokers or advisers it deals with and for the most part, no regulatory oversight to protect investors) its use should be evaluated carefully.

Furthermore, it is critical to understand that because there is a finite supply of structured settlement payment rights on the "used car lot" because less than 10% of the holders are selling,  it may not be possible to immediately fill a specific need using this strategy.

It also appears that holders of transferred structured settlement payment rights do not enjoy the same consumer protections as the original payees.

In my opinion, the structured settlement industry would be wise to embrace this concept and to air out and set standards of ethics regarding its practice.

 

SSP Goes Where NSSTA Dares Not Go with Education Program

by John D. Darer CLU ChFC CSSC RSP

Although I won't be attending I was impressed with the educational program put together for the Society of Settlement Planners Annual Meeting. It appears filled with topics that can immediately be put into practice, such as:. 

• Liability Set Asides in 2011
• Liens-How to Speed Up Resolution
• Qualified Settlement Funds-What You May Not Know
• Taxation of Damages
• Dissecting a Settlement Plan
• Allocation of Medical Expenses and the Impact of Different Types of Settlements on Plaintiff's Beneficiary
• Equity Indexed Annuities and Settlement Planning; 

and a series of topics and featured speakers from the LBN /Brook-Hollow Educational Seminar in Scottsdale last Month

• Use of Electronic Media and Social Networking
• Use of Structured Settlement Annuity Payment Rights; and
• Expanded Use of Non Qualified Assignments

Note: Members of the settlement community, including this author, received SSP invites this week, although the invite expressly states that the SSP reserves final approval for each registrant's application for attendance.

The NSSTA upcoming educational program also looks great (I will cover it in another post),  but I will say this.

The SSP has taken the bold step of creating a rigorous graduate level professional certification program, Registered Settlement Planner, which tests the ability to put knowledge into practice, although it appears unwilling to relinquish board seats to anyone but core SSP members.

The SSP took a bold step and, for better or worse, in 2010  has individuals with factoring business interests on its Board of Directors. 

The SSP has taken the bold step of including in its 2011 program. how to use structured settlement payment rights to help tort victims, a topic that I have extensively researched, written and podcasted about  (see video links at the bottom of this post). The topic may be horrifying to some, but how can you criticize it if you don't know anything about it? Perhaps you are content giving people a neglgible rate of return in the short term?

In 2007 a slew of candidates for the NSSTA Board of Directors trudged up to the microphone in Toronto pledging to do something about factoring if they were to be elected.  Some did elected. Did they fulfil their campaign promises in this regard? NO.  Every year candidates step up and say they are going to do something about it and don't. At this point it is simply not credible.

What is most disappointing with respect to the effort of NSSTA is the widespread failure to find the most efficient focal point for their efforts on the factoring front. Instead of focusing on a licensing standard to rein in bad sales practices concerning advertising and solicitation of tort victims (which is what REALLY offends people in the industry and trial lawyer community), NSSTA has supported what is in my opinion a very poorly researched Wall Street Journal article in July 2010 and predictably one sided presentation on the purchase of stuctured settlement payment rights at its Fall 2010 meeting in Las Vegas that built on the message in article.

Whether or not such efforts are part of a grand display of "sweeping under the rug ", the reality is factoring is not going to go away and a number of NSSTA members already do one or more of the following:

• Assist sellers of structured settlements for compensation, disclosed or undisclosed
• Assist sellers of structured settlements pro bono
• Buy structured settlement payment rights for their own accounts
• Sell structured settlement payment rights to trial lawyers and others
• Facilitate the sale structured settlement payment rights to trial lawyers and others
• Facilitate the use of structured settlement payment rights to help tort victims
• Display some of these services on their websites (although very few)
• Have "clandestine" relationships with factoring companies

It's time for NSSTA to step into the new reality. In my opinion it is doing its membership a great disservice by not staging a quality comprehensive "uncensored" education program on the subject for its members.

Exploring the In Force Structured Settlements Market-1

Exploring the In Force Structured Settlements Market-2

By the way, stay tuned for the  podcast of my debate with Matt Bracy of Settlement Capital which was shot last month. LBN tells me it will be released "any day now".

 

 

Supporters of Trial Lawyer Associations "Cannot Join The SSP". How About Incumbents?

New applicants to the Society of Settlement Planners must certify that they, individually will not participate or benefit in any way-whether directly or indirectly in finder's fees or payment of any form to a defendant, insurer, in-house agency of a  defendant or insurer; defense attorney  OR claimant's attorney, or any of their respective associations.

Download Society of Settlement Planners Membership  (note emphasis added)

And I thought the Society of Settlement Planners was looking to attract new members instead of lose incumbents. But then, wait for it...

Doesn't that rule out at least three of the current officers of the SSP and decimate its incumbent directors and members who "benefit in any way"-whether directly or indirectly, and/or make "payment of any form" to trial lawyer associations in one or more asundry ways such as association sponsorships, "Friends of Eagle" website listings, site sponsoships, golf tournament sponsorships, exhibits at trial lawyer meetings, leaders forum suites, advertisements, theater tickets, raffle prizes, suites at baseball games, suites at football games, payments to TLA mortgages, payments to political candidates that help plaintiff lawyers, and memberships in Partnerships for Justice?  This author has in his possession a copy of a message from a trial lawyer's association list serve email regarding a firm that one SSP member is the President of,  where a trial lawyer went on a list serve and essentially solicited structured attorney fee business for them on the basis of the amount of contribution of the firm to that State's Partnership for Justice. Doesn't that look to you a whole lot like "benefiting in any way-whether directly or indirectly" from a "payment in any form"?

The SSP professional membership application has been craftily worded to attempt to effect the maximum "wiggle room". by saying  "My membership application is an individual and not as a representative of my employer; firm or brokerage with which I have a contractual relationship. It shall not be presumed or inferred by this organization that my acceptance of the Mission statement as my personal belief is necessarily the position of my employer, firm or contractual brokerage. I am also free to reject as my personal belief the terms of any resolution adopted by this organization that is not incorporated in the Mission Statement".

Unfortunately if one is to read the literal meaning of what the SSP themselves placed into circulation, such wiggle room surely cannot be granted to those who are owners and principals in firms. How can one be excused just because the name on the check is an entity in which you have ownership and rather than you personally? It's a credibility killer for the Society to be sure.

Yet when it comes to factoring, all bets appear to be off. While, the Society of Settlement Planners, to its credit, includes in its Standards of Professional Conduct for Settlement Planners adopted March 7 2008 [at Rule 9 (c)(2)]Download SSP_SPC, that a settlement planner may accept an engagement to provide advice and assistance in connection with a structured settlement factoring transaction "provided he/she confirms in writing the existence of and the basis or rate for determining any compensation to be paid to the settlement planner for providing such services", such payments have been proven to come out of the gross amount to be paid to a selling structured settlement annuitant. Moreover,  a Director of the SSP who is the principal in a factoring company not so long ago published a missive defending the practice of making such payments (to settlement planners, who it was once alleged in a publication by the Director asked for them) as ostensibly being in the selling payee's best interest.

The message is, if you you want to grow your organization and take it from "the plateau" to the next level, don't insult the intelligience of those you are trying to recruit as members.

That being said, the SSP is doing a few things right which will be covered in another post.

 

 

Structured Settlements Industry Trade Associations: We Expecting Too Much?

Do we expect too much from our trade associations?

Patrick Hindert raises some interesting points in his discussion of healthcare reform in a generally well written article posted on the S2KM blog. The good however, is tainted by Hindert's customary bashing of the settlement industry trade associations educational programs following his return from some other trade association's conference.

From the tame "While the Academy of Special Needs Planners (ASNP) and the National Academy of Elder Law Attorneys (NAELA) are providing their members with detailed analyses of health care reform, the structured settlement industry has not yet addressed this historic legislation in their educational programs" Hindert then suggests the following reasons:

• Product focus instead of customer focus;
• Circumscribed scope of knowledge;
• Limited strategic thinking or analysis;
• Retrospective and inside-the-box orientation;
• Protect and preserve mentality.

While I admire Hindert for his self confessed mind expansion, perhaps he has too great an expectation of the settlement industry's trade associations.  This author admits that at times his own expectation of the National Structured Settlement Trade Association has been well above what has actually been delivered.  Yet, in common with Hindert, I have not depended on the industry's trade associations to help me achieve my knowledge leadership goals.  Nor have I depended on them to stay ahead of and keep me apprised of new ideas and information that impacts my business. They are just one important ingredient in the mix and serve a role, a very limited but critical one.

Judging by the number of calls I receive from competitors and industry colleagues about technical issues and information i live in comfort that I am not alone. 

There are a number of innovations coming into the fore in the next few months. Were it not for industry discourse among the industry's knowledge leaders or prospective knowledge leaders, these innnovations would not be happening. The LBN/Brook Hollow taxable damages educational seminar in Scottsdale, Arizona April 12-13 (which I will be attending) is a perfect example of an alternative.

 

The Great Pretender: A Little Embellishment from SSP Founder

by John Darer CLU ChFC CSSC RSP

Picture Jack Meligan belting out the Freddie Mercury classic  "The Great Pretender" as part of his latest scare tactic,  the conclusion of which is to misrepresent that the best settlement planners are members of the Society of Settlement Planners (SSP). 

Meligan's credibility is undermined because the SSP is a professional society of 40 or less AND the majority of whose members Meligan fails to disclose, are part of Meligan's company. The membership of the organization has stayed stagnant for several years in part because of  the perception of de facto control of over the top extremists like Meligan and his and others perpetual use of outdated scare tactics.  These are apparently accepted standards of the SSP.

While some talented settlement planners are members of the SSP, in an industry of over 1,000, the majority of the most talented settlement planners in the country ARE NOT members of the Society of Settlements Planners.

This author is a Registered Settlement Planner who chooses not to be a member of the Society of Settlement Planners for the aforementioned reasons, among others.

Meligan should focus on his own personal talents in the settlement planning area.

Plaintiff Lawyers Warned Of Legal Malpractice From Settlement Planners Who Can't Read Cited Cases

by Structured Settlement Watchdog®

A Society of Settlement Planners Board member needs to get their facts straight. Based on what appears on the Settlement Professionals Inc. website today, former SSP President Jack Meligan, gifted settlement planner from Oregon and yellow highlighter "black belt", could never be confused for someone who actual read the two legal cases that he cites,and uses, in an attempt scare plaintiff attorneys into doing business.

On the subject of Limiting Plaintiff Liability, Meligan writes (highlights included):

In Macomber v. Travelers Property & Casualty Corp. and Lyons v. Medical Malpractice Insurance Assoc., plaintiff attorneys have been sued for the harm sustained by their clients at the hands of the defense-provided structured settlement brokers.

Reality

• No plaintiff attorneys were named Defendants in the lawsuit captioned Macomber v Travelers Property & Casualty Corp.

Download MacomberTravelersII040406[1]

• Meligan's "analysis" of Lyons v MMIA is a bit simplistic, just like his affiliate Bill Tilley's chestnut from September 2009 (see below)
  

Download LyonsvMMIA286AD2d711

Bill Tilley Dishes Out "Old Rag" on Settlement Planning Blog

The settlement profession has evolved over the years. It is important for plaintiff attorneys and their clients to have someone who is qualified, and that they feel comfortable with, to advise them on settlement planning and transitional financial planning issues. That being said there's no excuse for the likes of Settlement Professionals Inc. or anyone else to promote themselves using unreasonable scare tactics, such as citing facts that don't exist.

 

 

Spencer v Hartford Class Action Settlement: Only Clean Mirrors Reveal True Reality

Those in the structured settlement and settlement planning industry aiming to leverage the Spencer v. Hartford case for marketing purposes should reflect on their own actions

A specific class carved out of the class action lawsuit included those who settled with Hartford insureds with a Hartford Life structured settlement BUT, were represented by a plaintiff structured settlement broker or settlement planner.

While you can count me as someone who had disdain for The Hartford's erstwhile "all or nothing" structured settlement business decision, there are questions to be asked of those who now have aspirations to burn The Hartford and other insurers in effigy.

Inconvenient Questions

1. How many of those now using Spencer v Hartford as a tool with plaintiff lawyers accepted a share of commission on structured settlements from Hartford insured cases THEN, when they had knowledge that there was "deal" in place?
2. How many of them were affiliated, at any relevant time covered in the lawsuit, with general agents who signed agreements with The Hartford to accept a lower rate of commission on cases settled with Hartford insureds?

Ironically, one of the plaintiff attorneys in the class action, Richard B Risk, Jr.  (" Dick Risk"), who was recently given a lifetime achievement award by the Society of Settlement Planners ("SSP"), in part due to the result of the suit, was a licensed insurance agent and structured settlement broker for the early portion of the relevant times covered by the suit.

It's disheartening to see some in my industry take this path. However, there's a certain irony in considering that eventually, the link will be made between these excessive marketers and their own lack of transparency.

"Reality Is Only Seen When The Mirror Is Clean"-Unknown

Registry of Settlement Planners Board Top Heavy With Settlement Professionals Inc.?

by John Darer® CLU ChFC CSSC RSP

Is it appropriate to have a board of directors composed 62.5% from one company? That is exactly what the story is with the Registry of Settlement Planners Board  (RSP Board) , five of whose eight members are affiliated with a single company, Settlement Professionals,Inc. This is not to take away from the knowledge that these individuals have, or years of experience that might make them an asset to such Board, but it seems to have the potential to create a major conflict of interest. There are enough RSPs to create greater diversity on the RSP Board than there is today.

I'm proud to have earned the designation of  Registered Settlement Planner (RSP) and was the first one in the United States to earn the designation. Yet I am concerned that the RSP Board lacks the level of diversity that will give it greater credibility and foster future growth of the RSP designation.

I hope that those that are responsible for creating this potential conflict of interest on the Registry of Settlement Planners Board make things right and soon.

NSSTA & SSP Annual Meetings: Pedantic Pat's Droning "Emission" Contains Glaring "Omission"

Like a campy horror show, Pedantic Patrick Hindert posted an unprecedented 9th blog post about the SSP and NSSTA 2010 annual meetings. While Hindert continues to fill his commentary with factual but predictable filler and drivel like "approximately 10 people attended portions of the SSP and NSSTA meetings", HIndert continues to avoid the controversial and big news that the Society of Settlement Planners named a factoring representative to its Board of Directors.

Ironically it was Hindert who expressed (in previous blog postings going back years) that factoring is the key to structured settlement industry growth. Hindert challenged this author to a debate on the topic in May 2008 and then famously chickened out when I accepted. Now that the dog can have his day he is famously avoiding his own scent mark. See Patrick Hindert Called On The Carpet For Specifics

What I really want to know is does Hindert see having representatives of factoring entities (which buy structured settlements from tort victims) on the Board of a trade association (whose members place structured settlements) as a positive thing or negative thing? Why? Moreover, now that the industry's cherry "has been popped" as it were, is it appropriate for the credibility of the group, that the subject member on the Board is apparently the only member (and apparently can be the only member) when there may be other factoring entities who offer alternatives in educating the public.

He does a better job in posing post-conference leadership questions:

• How will SSP's and NSSTA's new leaders respond to industry changes, challenges and opportunities?
• When and how will SSP and NSSTA transition their educational strategies to embrace the Internet?
• What shared interests exist between SSP and NSSTA to improve and grow the structured settlement industry?