from the WSJ daily briefing –
May 4, 2016 5:30 am ET
MetLife agreed to pay $25 million for allegedly misleading customers about swapping existing variable annuities for new contracts between 2009 and 2014. The Financial Industry Regulatory Authority fined the insurer’s MetLife Securities Inc. unit for allegedly making the replacement annuities seem better for the customers than they actually were, according to The Wall Street Journal. Specifically, MetLife sometimes overstated the cost of a customer’s existing variable annuity and sometimes failed to tell customers a proposed replacement would reduce or eliminate features of their existing annuity, Finra said. MetLife neither admitted nor denied the findings. Industry experts say inappropriate replacements are a problem for the entire industry, with some agents pushing the moves in order to reap typical 5% to 7% upfront commissions. according to WSJ.com. Investors should have a healthy skepticism when pitched a replacement annuity, and should compare all fees and benefits in the two contracts.