Financial Planner Slapped With Suit
Copyright: | (c) 2011 IBJ Corporation |
Source: | Proquest LLC |
Wordcount: | 1094 |
An
United Financial used estate planning as the hook for a lucrative business selling other insurance products until 2008, when the
"Any time you have a financial services company marketing exclusively to retirees and elderly people, it raises questions," said
worked under contract.
United Financial no longer sells estate plans, at least as a primary offering. A sister company, Alliance America, in
IBJ reached
One of Follett's lead salesmen,
Like many United Financial clients, Kennard, 89, had a will in effect when a saleswoman visited his home in 2002. She persuaded him to buy power-of-attorney and living-will and trust documents, which were drafted by a lawyer that the firm contracted.
Kennard's probate lawyer later revised the work.
"It's a convoluted, mixed-up situation," attorney
Some of United Financial's clients not only bought inappropriate estate plans, but paid huge tax penalties after they cashed in valuable stocks to buy the firm's annuities. Such stories prompted the bar association to try to conduct its own investigation and eventually led it to file a complaint with the Indiana Supreme Court'stdisciplinary commission.
The court's order applied to 1,306 clients who collectively must be repaid more than
United Financial has 4,197 more
We believe this case is ideally suited for class certification because the
Sales hook
United Financial says it sought to educate clients about the pitfalls of settling their estates in probate court, but a judge said its methods were alarmist.
"The education provided by United Financial is an entirely one-sided ad delivered in such a way so as to likely alarm the customer," concluded
Most people bought United Financial's costliest estate-planning package, which was most recently priced at
The salespeople received
The contracted attorneys, meanwhile, received
The estate-planning fees made up a small portion of United Financial's impressive sales, Embrey found. In one 31-month period,
In addition to gathering information for drafting documents, the salespeople would have customers fill out a financial profile, which was later used by a second salesperson who tried to close a deal on an investment.
United Financial would relay the documents to the attorneys, who would call the clients to discuss their information.
But Embrey noted that wills and trusts prepared by different lawyers over a five-year span were "remarkably similar." In one instance, the documents contained a clause for distributions to children, though the client was a 70-year-old woman with no children.
The second salesperson, a "financial-planning assistant," would deliver the documents and help clients execute them. Then he or she made a pitch for investments.
Embrey noted that some of United Financial's clients cashed in valuable holdings so they could buy annuities.
"After the transactions with United Financial, Mr. Nesbitt had insufficient cash flow to take care of his daily living expenses," according to Embrey's report.
The company said it employed a tax strategist and financial consultant, but Embrey found that wasn't true.
"Not a single satisfied UF customer appeared at trial to testify on behalf of United Financial," he noted.
United Financial shifted gears around the time of the bar association's complaint to selling supplemental
United Financial Systems
Business: insurance marketing; formerly sold estate-planning services in 13 states
Founder:
Recent events:
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Source: court filings
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