by Structured Settlement Watchdog
Targeted for "Skyrmination"?
Members of the National Structured Settlement Trade Association have been "targeted for Skyrmination" by Covered Bridge Capital Settlement Funding (CBC) as blast emails were sent to members in the hopes of a hook up at the American Association for Justice convention in New York City this week. Skyrm, formerly a lawyer with J.G. Wentworth is major domo at Covered Bridge Capital Settlement Funding.
Referral Business Has Lower Acquistion Cost
Referral business generally has a lower acquisition cost (unless hefty financial consideration is paid to the referrer to induce the referral) so factoring companies are targeting those who write the business in the first place in the hopes that when their clients call them for advice they will refer them to a factoring company. An annuitant may feel more comfortable dealing with someone referred by a trusted advisor.
CBC's email blast is further evidence of increased secondary market competition for referrals from primary structured settlement sources. One factoring company/intermediary, a former structured settlement broker, cut their teeth exclusively working the structured settlement primary market for leads. That exclusive market has been broadly infiltrated and has come under pressure with the increased competition from factoring auction websites, efforts by competition to hire more current or former primary market players as well as the traditional intense advertising of the big boys.
Competition is as healthy for the selling annuitant if they must go down the path of selling structured settlement payment rights as is transparency regarding who is being compensated in every deal.
Last month a Texas court ruled that one factoring company could effectively gazump another factoring company right up to the courthouse steps before a hearing to approve a transfer.
But it's not all good.
A. The structured settlement watchdog, John Darer, and industry colleague Mark Wahlstrom recently appeared in a video podcast on Legal Broadcast Network to discuss efforts by an actor in the factoring industry to induce structured settlement brokers and settlement planners to enter in to "co-marketing agreements". where ostensibly the broker/planner would pass along confidential, in some cases protected, information about a structured settlement annuitant to the factoring company, which would then solicit the annuitant and pass along a fee to the co-marketer. individuals are being contacted to sell structured settlements even when their records were part of unpublished confidential transactions. Apparently soliciting buyers are aware of when payments are coming due.
An investigation is being conducted by multiple parties to determine which players in the primary or secondary market are involved. We have developed through our sources that at least two primary market players are involved.
B. While it is well known within the industry that industry participants are helping annuitants sell their structured settlement payments rights, (even if in some cases it is little more than referring business to one or more factoring companies), there is still little to no disclcosure of this service on the websites of participants. The lack of disclosure applies whether or not compensation is involved.
With a softening of industry attitude towards the secondary market (e.g. a financial adviser for a major wire house who used "too easy to factor" as a reason to trash structures to attendees of an ABA TIPS conference that I attended in November 2005 now sells structures; the Society of Settlement Planners has had a structured settlement payment rights buyer on its Board of Directors since at least May 2010), one wonders with so many more factoring companies infiltrating the industry and so many more choices why such services are not proudly displayed, or even displayed at all?
The Society of Settlement Planners director published less than 4 years ago that 90% of her clients (who she represented around the time were all from the structured settlement industry) took compensation for referring selling annuitants. Despite repeated attempts by the structured settlement watchdog to obtain the information from her, the individual has been unwilling to state a lower percentage to the public. Another factoring intermediary has published that it has paid out millions in commissions.
Moving Bootleg Whiskey During Prohibition or Providing Financial Services in the 21st Century?
It seems to me that if legitimate services are being provided by structured settlement brokers and settlement planners, then they should be peddled out in the open, in the mainstream instead of like moving bootleg whiskey during Prohibition.