On September 5, 2007, the United States Senate Special Committee on Aging held a hearing on Advising Seniors About Their Money: Who Is Qualified- and Who Is Not? Senator Kohl from Wisconsin began the hearing by stating that the purpose of the hearing was to examine the growing national problem of poorly trained senior investment specialists and take the first step in much needed reform. He also stated that an investigation conducted by this committee had found that many seniors are losing their retirement income and savings by placing their trust in so-called “advisors” who in many cases may not deserve that moniker.
The hearing focused on the controversial “Certified Senior Advisors” because the Senate investigation found that these advisors often have little to no education and no experience in extremely complicated financial matters and investment products such as equity-indexed annuities. Senator Kohl stated that seniors should be able to trust the people who invest their money. They should not be worried that the title after their advisor’s name is often times scarcely more than a marketing ploy and one that is not earned through a rigorous educational or financial training.
Among those who gave testimony were Christopher Cox, SEC Commissioner, Joseph Borg, the Alabama Securities Commissioner, and Lori Swanson, Attorney General from the State of Minnesota. These regulators provided suggestions as to how annuity sales practices could be improved industry wide and advocated for the insurance companies that issue these policies to seniors to take responsibility for their agents.
Gary Bhojwani, CEO of Allianz Life Insurance of North America, also provided testimony to the Committee and defended Allianz’s sales practices that have recently come under fire from regulators and as a result of multiple class action law suits. During his testimony, Mr. Bhojwani announced that, effective immediately, Allianz would: (1) contact every policyholder who is 75 or older to make sure that they understand the products and that they are suitable for their investment needs and (2) only allow its agents to have certain designations after their name. There was no mention as to what those approved designations may be.
Mr. Bhjowani’s testimony came shortly after Joseph Borg and Lori Swanson criticized Allianz for disseminating deceptive and misleading marketing materials to consumers.
Page Perry is co-lead counsel in the largest certified class action currently pending against Allianz. The class consists of approximately 400,000 policyholders. The case alleges that Allianz falsely promises in its pre-sale marketing materials that consumers will receive a 10% “upfront” bonus when they purchase certain Allianz annuities. In reality, the class action complaint alleges, the bonus is not “upfront” and is not available to policyholders for 15 years, if ever.