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Representing Individual, High Net Worth & Institutional Investors

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Variable Annuity Riders

One of the most common investments sold by financial advisors to investors is the Variable Annuity (VA). These products are often sold because they pay among the highest commissions to the advisor. In recent years, we have seen many cases involving guaranteed income riders to these variable annuities. Many of these riders provided guaranteed income or growth to the investment and are usually the most important reason the VA is sold in the first place. Problems sometimes arise with these riders when investors take withdrawals from their VAs that exceed the amounts permitted by them. When this happens, the guarantees can be either lost forever or capped at the time of the withdrawal, preventing further growth.

A common scenario involves an investor needing some cash to address an important need. Perhaps a new house is being purchased, a wedding needs to be funded, or a dream vacation is booked. When the investor discusses this cash need with his/her advisor, there is no discussion about how a withdrawal from the VA would impact the guaranteed income rider, so the advisor recommends that the amount be withdrawn for the VA, even when other sources are available. Once this error is later discovered by the investor, the only option is usually to file a FINRA arbitration against the advisor and his brokerage firm for not disclosing the risks of this withdrawal and causing the future losses to income.

If you are an individual or institutional investor who has a concern about a Variable Annuity or a VA rider, please feel free to contact us for a free initial evaluation. You may have a good claim for a FINRA arbitration to recover your losses.

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