Fraudulent inducement is a key concept and element of this financial advisor fraud. Switching annuities is not an improper or abusive act by a financial professional. Annuities, like any investment vehicle, are fungible and can be sold, transferred and converted or new policies yields and yield curves can vary over the life of your investment program and annuities can be incorporated. It is when the annuity that you are sold was presented in a fraudulent manner, where the inducement is improper and the fraud involves material misrepresentations by your financial advisor or investment advisor which ultimately result in your making a transaction which is against your financial interest. You're familiar with bonds and bond yields, the expiration of bonds and their sale and the transfer of your investment from one vehicle to another. This is also a routine transaction for financial professionals handling annuities for either individual investors or large public or private retirement programs. What makes a transaction fraudulent is the improper inducement by the financial professional, stockbroker, to induce the investor to enter into the swap. We most commonly see sanctions for annuity switching in the context of brokers who handle annuities for public 401k's such as teachers and in industrial and large investment pools. But if you are an individual investor residing in Fort Lauderdale, Boca Raton, West Palm Beach and have an investment with a stockbroker in an annuity you can be the victim of the abusive practice of annuity switching.

These cases come up usually in a sort of pattern. The Securities and Exchange Commission finds that the financial advisor convinces customers some of whom are often advisory clients, to surrender annuities and buy a new annuity. If the swap occurs within an 18 month period it should be considered a suspect transaction. It is a strong indicator that it would be appropriate to investigate the financial underpinnings of the transaction. We begin our investigation of stockbroker fraud or stockbroker misdeeds regarding the sale and purchase of annuities by using a standard annuity switch calculator program. You can find it at Kiplinger or any other annuity site. Use the calculators to make the underlying merits clear: that is whether switching from one annuity to a different annuity makes sense. Look to see if there is any capital lost after the surrender charges. Investing in a new annuity often has front-end sales fees and those fees can be generated for the benefit of your financial advisor to your ultimate harm. And that is the key test for an annuity switching scam: that is whether the transaction makes sense for you or is in effect a way for an unethical stockbroker or financial advisor to generate a fee from your investment account by making a switch.

In Florida, where we have great many retirees living in retirement communities in Boca Raton, Palm Beach and Fort Lauderdale, the annuity is one of the underlying vehicles to generate income. In an annuity switching in scam you usually see or hear a too good to be true sales pitch about a potentially large payout. Annuities can be structured as simple income producers or as complex elements in an investment portfolio. Annuities can be used to generate income, to pay taxes, as part of a sophisticated tax planning technique and to fund payouts to family members upon your death. A common scam which is currently being sold in Florida through so-called boutique investment houses is the stranger-owned life insurance policy. The state of Pennsylvania has been most active in attacking this stockbroker investment adviser fraud scheme by enforcing the general rule that to purchase and own a life insurance policy one must have a financial interest in that person. You can't bet on someone's life without violating the wagering probation embedded in insurance laws throughout United States. Investment switching frauds can be devastating to you because there is often a period of years between the upfront payment for the annuity and the vesting of a return. A financial advisor who encourages you to switch annuities should set off your alarm. If your financial advisor has acted improperly by making representations about financial returns which are not provable then you may be the victim of a financial fraud. A fraud, and this is basic law, involves a material representation reasonably relied upon by the victim to their ultimate detriment. The essential elements of this stockbroker, financial adviser fraud are misrepresentation of the true yield return or costs involving annuities. You'll commonly hear the word churning, twisting, and faked deaths in the context of this stockbroker fraud. It is not only stockbrokers who commit this crime against you, be wary of the accountants who enter into financial planning by promoting annuities which would be inappropriate for your financial plan. The underlying fraud involves deliberate misrepresentations of yields and returns, blackout periods and fees generated by the sale of an annuity. It is often a too good to be true promise that turns into a financial disaster.

You should understand all the elements of the variable annuity to protect yourself from this investment advisor fraud. Understand what a variable annuity is and what is an uninsured security or insurance product. Be wary of annuities with subaccounts within a package of variable annuity products in a tax-deferred platform. Investment advisors who would mislead you will often start with a presentation about the attractiveness of a variable annuity. Variable annuities are known as overpriced products that simply cost more than they are worth because they are primarily insurance products and not investments.

If you have been materially misled into swapping an annuity for another annuity you may be the victim of this fraudulent scheme. Contact your stockbroker fraud attorney and ask for a review of your portfolio. The scam is most often introduced at investment seminars in which you're invited by a stockbroker, financial advisor, accountant or independent financial advisor and told how you can avoid taxes.

If you've been the victim of one of these financial frauds and the salesperson is part of a legitimate investment firm you may be halfway towards an arbitration award. Since the 1990s many of the larger brokerage houses have been moving from traditional stock and bond investments into hybrid programs in which they offer an entire supermarket of financial products, from insurance and annuities to mortgages and credit cards. If your financial advisor seems to be over selling financial products which are outside of your appropriate investment package be alert to this fraud.