F&G Sued in Class Action Lawsuit

Missed Fortune 101 Author, Doug Andrew, Sued
Along with F&G in Class Action Lawsuit

                Before I start this important newsletter, I wanted to list a few items of interest.

                1) My new Income-for-Life White Paper is done. To download, click on the following link: www.pomplanning.net/incomeforlifewhitepaper.  

                2) If you missed the webinar we did last week on EIUL training/marketing, you can now watch it on recording by clicking on the following link: http://www.provenmarketingstrategies.net

                3) A New FIA Selling System that actually works. Over 100 advisors have gotten licensed in the last few months. To find out why, click on the following link: www.strategicmp.net/page/life/fiasalessignup.

                Class-Action Lawsuit

                How a lawsuit against Doug Andrew and F&G Life flew under the radar for so long I’m not sure, but I just got wind of it late last week; and I wanted to tell my hot list about it right away.

                It is impossible for me to give my full opinion of this class-action lawsuit in a short newsletter. Therefore, I have created a web page with a more complete explanation of the lawsuit and the effects it will have on our industry. 

                To read my lengthier summary and to download a copy of the complaint and proposed settlement, please click on the following link: http://www.pomplanning.net/doug.andrew.lawsuit.

                Missed Fortune 101-if you’ve read my newsletters over the years, you know I’m NOT a fan of the MF 101 sales platform. The platform was based on a book written by Doug Andrew and revolves around removing equity from a personal residence to fund cash value life insurance (EIUL specifically).

                I was so disgusted with Doug’s book and his sales platform that I wrote my own book explaining how to accomplish “equity harvesting” the right way while adhering to the tax code. My book is titled The Home Equity Management Guidebook (to learn more, click on the following link): www.thewpi.org/?a=PG:1434.

                Ironically and pathetically many advisors paid Doug $3,000-$5,000 to attend training on his sales system.

                The complaint against Doug and F&G stated:

                -that the “marketing scheme” was referred to as “Missed Fortune.” The major claim in the lawsuit is FRAUD (which is always scary).

                -that the goal of the scheme was to “deceive” clients into purchasing EIUL policies as an “investment.”

                -that the policies were uniformly misrepresented.

                -that the “scheme” was an elaborate ruse designed and carried out for the primary purpose of selling “high-dollar” EIULs.

                -that F&G acted in concert with “producers” (agents) and Andrew to market EUIL policies as an “investment” which is contrary to the best practices of NAIC Model Advertising Rules.

                The settlement-this case has been settled. Again, how it got filed without the industry knowing about it is really a mystery. The settlement is very interesting and has in it among other things the following:

                -F&G shall provide notice to agents and affiliated IMOs that its EIULs are NOT to be sold as investments or as part of an investment plan.

                -Doug Andrew will make sure in his future writings/publications, seminar presentations, and websites that the following disclosure will be prominent: Life insurance policies are not investments and, accordingly, shall not be purchased as an investment.

                -Doug Andrew shall NOT use the term “investment grade” life insurance in publications or presentations in which life insurance is referenced.

                I strongly recommend you read the complaint and settlement. The focus of the suit using “fixed” life insurance as an investment is troubling. I think the effects of this suit could send ripples through the industry.

                -The total settlement amount for all defendants was just over $1.25 million.

                No admission of guilt-as is typically the case with a settlement, it states that the defendants agree to pay and make no admission of guilt. Knowing Doug’s sale’s practices well and after talking with dozens of his “certified” MF 101 agents, I have my opinion of whether this was a nuisance suit or one that had real merit.

                Is Aviva next?-what’s also interesting about this lawsuit is that as far as I understand it, Doug’s agent army sold way more Aviva policies than F&G. I wonder if the attorneys will now turn their attention to Aviva. I guess we’ll see.

                Moral of the story?

                I’ve been warning agents about MF 101 for years. I recommended they stay far away from it because it was my opinion that lawsuits would come.

                Many agents don’t do the due diligence they need to in order to determine if a sales platform is any good. They just want to know if it can make sales. The moral of the story is to do more due diligence before you use a sales platform (and making money at the client’s expense can get you sued) 

                That’s why I relish my role in the industry (to warn advisors about what’s wrong and what to stay away from.

               I’ve warned the industry about the following:

                –Bank on Yourself and the Infinite Banking System
                –IRA rescue using EIUL
                -Section 79 Plans (www.section79plans.net)
                –A/R financing/leveraging programs
                –$3,500 mortgage acceleration software
                -Several premium finance schemes
                -Several 419 scams back in the day
                –IMOs offering RIA services (that help agents violate their fiduciary duties)
                –Selling FIAs that seem too good to be true
                -Faulty CIC (Captive Insurance Company) structures
                -ROBS transactions
                –ROTH IRA conversions (which don’t work for most clients)         
                –College planning using life insurance
                -Certain life settlement structures

                Finally, the thing I’m warning most about right now is the abusive illustrations agents are giving out when selling EIUL policies. If you are giving out default illustrations (the company’s best back-tested crediting rate and today’s historically low lending rates in a policy that doesn’t have a fixed rate), you better make sure your E&O is paid up. It was for this reason that www.eiultraining.com was created.

Roccy DeFrancesco, JD, CWPP™, CAPP™, CMP™
Founder, The Wealth Preservation Institute
144 Grand Blvd
Benton Harbor, MI 49022

Author of The Doctor’s Wealth Preservation Guide; The Home Equity Management Guidebook; The Home Equity Acceleration Plan; Retiring Without Risk; Bad Advisors: How to Identify Them; How to Avoid Them; and Peace of Mind Planning: Losing Money is No Longer an Option.