New research by the Wall Street Journal has uncovered a disturbing trend of financial planners and advisers known as "pension poachers" targeting military veterans for financial crimes and abuses.
The concern lies with financial advisers and other representatives afforded access to military benefits, for, as WSJ points out, veteran investor-focused legislation intended to improve accreditation standards and requirements is still pending.
Financial representatives authorized to advise veterans, as presently stands, are subject to minimum accreditation standards because the veterans department is presently ill equipped and unprepared for regulation and enforcement, much less receiving and responding to complaints. The department's Office of General Counsel, for instance, has just four staff members assigned to overseeing the accreditation and maintenance of nearly 20,000 financial representatives, a scope of command that effectively assigns each staff member a group of 5,000 representatives.
A 2012 bill intended to address the issue of (un)accreditation standards died in committee; a revised bill is currently pending.
The scheme operates thusly: A financial planner or adviser—who may even be an employee of a veterans' service organization—with an unethical agenda is put in a position to advise veterans on matters of benefits because accreditation standards are so low and enforcement gaps so large.
Once afforded the opportunity to advise or plan, the unethical or incompetent adviser makes unsuitable recommendations, factually inaccurate statements or advertisements, charges inappropriate and excessive fees or engages in some other degree of financial misconduct that costs veterans money.
Specifically, WSJ identified inappropriate sales of annuities intended to bolster veterans claim pensions. In selling these annuities, financial representatives are obliged to ensure the veteran investor meets certain income and net-worth requirements.
Misconduct occurs when a representative advises a veteran to transfer money into an inappropriate annuity, even though the cash becomes locked and unaccessible and the transfer of assets can make the veteran ineligible for services such as Medicaid.
If you have invested with a financial representative who primarily or solely engages veteran investors and this adviser has made unsuitable recommendations, misstatements or omissions of material fact, charged inappropriate fees or committed another form of misconduct or financial abuse regarding annuities or other securities and such nefarious conduct has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News: Veterans At Risk for Financial Abuse (Wall Street Journal Online)