Galvin said he has subpoenaed other financial institutions over variable annuity sales but declined to name them.
Expensive, poor performing variable annuity insurance products dominate this niche that many mutual fund companies seemly ignore.
Morgan Stanley has also limited its variable annuity sales to underwriters who participated in fee-sharing deals, it adds.
The class actions come amid rapidly mounting scrutiny of variable annuity sales practices by the NASD and others.
Insurance companies with big variable annuity books may drop their annual guaranteed rates, but their bond portfolios will appreciate.
There are some money management firms, particularly variable annuity insurance companies that have pursued this marketing course to a level of absurdity.
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These days, almost 90% of those who buy a variable annuity pay an extra layer of fees for a so-called living benefit.
The breach of fiduciary duty allegations stem from the fact that the Plan assets are invested in a tax deferred variable annuity.
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San Diego securities attorney Ronald Marron has filed a complaint over Morgan Stanley's variable annuity sales practices with the National Association of Securities Dealers.
The fees typically raise the already-high cost of a variable annuity to an average of almost 3.5% of assets per year, according to Morningstar.
With a variable annuity, in contrast, you won't know what you'll end up getting since your account value will fluctuate with the investments you select.
Variable annuity products are so laden with fees that insurance companies can easily afford to pay kick- backs to unions and other non-profits for steering participants.
They were issued by Manulife (subsequently taken over by John Hancock) and were called Flexible Purchase Payment Deferred Combination Fixed and Variable Annuity Contracts Non- Participating.
In the future we are likely to see a variable annuity mini-boom as manufacturers and distributors of the products continue to offer lifetime benefit guarantees.
Today, some of the main culprits are structured notes, hedge funds (including hedge funds of funds and hedge funds of funds of funds) and variable annuity schemes.
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MetLife sells as if 10 year Treasuries will yield 2 percent for the next 5 years, that the stock market withers below 1000 and variable annuity sales dry up.
The high fees associated with the variable annuity reduce the net rate of return received by participants in the Plan, but also enable Nationwide to pay NACo the endorsement fee.
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They are focusing on variable annuity type products in retirement plans because politicians in many European countries are mandating annuities to be included in pension plans within 24 months or so.
The subpoena was served by Secretary of the Commonwealth William Galvin and seeks information about whether the leading Wall Street firm received secret payments from insurance companies to sell their variable annuity products.
Marron also has a complaint pending with the NASD in which Charles Schwab (nyse: SCH - news - people ) is accused of wrongful variable annuity sales practices and abuse of elderly clients.
Variable annuity products are exponentially more profitable to their issuers than almost any other retail investment, so lots of money (skimmed from investor accounts) is available to help make the sale and shall we say, grease the wheels.
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On the other hand, if the employer is asleep at the switch and simply outsources investment decision-making regarding the plan to, say, an insurance company, the investment options will almost certainly be wrapped in a high-cost, high-risk variable annuity.
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He has worked as a Certified Financial Planner, a Certified Divorce Financial Analyst and an arbitrator for the NASD, NYSE and AAA. George is approved by the Florida Licensing Education Section to instruct life, health and variable annuity courses.
Officials in the attorney general's office were uncertain what surrender penalties would apply to teachers who sought to exit the program before new products are offered next year (when no-penalty rollovers will be permitted at least on variable annuity investments).
Dornan's class action alleges that at least since 1990 variable annuity underwriters and Morgan Stanley maintained "secret contingent fee sharing arrangements" in which a portion of commission revenue was paid to the brokerage as an incentive to sell the product.
Further, the AWC alleges that during the period from May 2008 through July 2008, Abern provided five Cambridge customers with variable annuity expense disclosure forms that contained inaccurate information, in that the forms understated the annual expenses that would be charged.
Under its fee-sharing arrangements, Morgan Stanely has received 10% of first-year commissions back from underwriters as contained in an "override addendum" on variable annuity policies, according to information Marron says he received from Morgan Stanley during the discovery process for Dornan's NASD complaint.
Moreover, insurance companies are set to unleash an onslaught of flexible annuity products, such as Lincoln Financial's i4Life plan, which is a variable annuity that hedges against inflation, puts a floor under income payments and provides a death benefit if your die before 85.
More employers (11%) already offer annuity or insurance products within their 401(k) plans such as variable annuity features or guaranteed minimum withdrawal benefits, and of those employers not offering these features, 3% are very likely and 13% are somewhat likely to add them this year, according to the Aon Hewitt report.
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