If a meaningful part of your business is transferring money from other accounts into annuities and life insurance, you’ve probably noticed a backlog building. There are several reasons for the slowdown and you should take preventative steps to overcome them. If you do nothing, expect to suffer even more because the other side of the transaction is taking pro-active steps to hang onto your clients’ money. The Great Recession can be blamed – and who knows when the economy will recover.

Let’s say your client’s money is coming from a mutual fund or variable annuity. A loss or reduction of an account means smaller fees, reduced commissions and higher losses; therefore, your clients can expect calls from brokers of the firms as well as at least two conservation letters citing all the reasons for not moving the money. Additionally, it is not unusual for new paperwork to arrive asking for re-confirmation that the money should be moved and the necessity of submitting additional, but unavailable, forms along with a Medallion Stamp Seal affixed. In some cases, your client’s request for transfer may simply be ignored by the current company. If this happens, do not hesitate to instruct your client to again request the transfer of money with clearly stated instructions and a stern warning that if not done promptly a complaint will be filed with FINRA, State Securities Commissioner, State Insurance Commissioner and/or Banking Regulators. Instruct your clients to keep copies of all the paperwork provided to the releasing company and to also send all correspondence via Registered Mail. Remember, disputes may be settled by arbitration, so be prepared.

If the money is coming from a fixed annuity, you can also expect delaying tactics like numerous conservation letters, phone calls, request for additional information and in some cases an invitation to meet with a company representative (aka an insurance agent hired to do conservation work). The worse thing that can happen to a bank or insurance company is a “run” by depositors/policyholders to withdraw their money. Since most depository institutions do not have sufficient liquidity to cover massive withdrawals, their continued existence depends on stopping the outflow. So, if the insurance company has suffered a ratings downgrade or other negative publicity there is the potential for a mass exodus; thus, expect an especially aggressive effort to keep the money in such cases. Since there have been numerous ratings downgraded and lots of bad publicity, the stampede toward the exits has begun and aggressive retention efforts implemented. This is why your pending 1035-exchanges have slowed to a crawl.

One “sometimes” effective way to get your transfer processed is to include a letter from your client to the releasing company which states “my mind is made up, I’m transferring my money and don’t want to hear from you about my decision…so just transfer my money as requested”. Such a letter is available at the below link and can be used as part of the transfer package. It has, in most cases, led to prompt action.


CONSERVATION RESPONSE
LETTER AVAILABLE HERE >>