The topics of broker assistance and compensation have been discussed at
length in recent months. In late December this debate became heated when John
Darer, a settlement planning consultant from 4structures.com, LLC went
head to head with Rhonda Bentzen, a structured settlement factoring broker doing
business as Bentzen Funding Solutions.
The debate between Darer and Bentzen revolved around whether or not it is
acceptable for you as a settlement planning consultant to charge a fee when you
refer clients to a factoring company. On this topic I would have to agree with
Bentzen that it is not unethical, per se, for a structured settlement planner to
charge such a fee provided such fee is reasonable in all of the circumstances.
My reasoning for this is as follows.
Similar to Bentzen, I have been on both sides. I was a life and annuity sales
agent for four years. I had created countless annuities for my clients and on
occasion when their financial positions changed I was asked to help them find a
way out of their annuity. This happened often enough that I found out about the
structured settlement factoring business and eventually changed my orientation
when I started Sovereign Funding Group in 2002.
Firstly as an insurance and annuities agent and now in the structured
settlement factoring business, I have always put my clients' best interest
first. I think that it is reasonable for a structured settlement planner or an
insurance and annuity representative to be compensated for his or her
professional assistance to clients when seeking out a reputable factoring
company and assisting with the sale details.
Where I disagree with Bentzen is when she states in her December 21, 2007
post that "… The referral fee ultimately saves the annuitant money and comes out
of my pocket ". That statement is simply untrue. Contrary to her assertion, any
fee charged adds to the overall sale costs and impacts the best price available
to the client in the marketplace.
In light of the recent controversy I think that it is important to provide
some guidance to structured settlement planners and annuity company
representatives who want your clients to make an informed decision that best
serves their needs, gets them the most money for their annuity as well as the
fastest, most professional service.
1. There are many circumstances when a structured settlement may no longer be
appropriate for your client. Times change. Your client's assets must be flexible
to weather these changes.
2. You have taken great care to design a structured settlement that best
suits your client's needs. The factoring company you choose to advise on the
sale of your client's annuity should take the same care in deciding:
(a) is a sale appropriate in the circumstances, and if so what compliment of
payments ought to be sold;
(b) what is the best price available for these payments;
(c) what is the most expedient court process to complete the sale?
3. Each sale requires court approval based on the best interest test of the
annuitant and any dependants.
4. Purchase price and service level can vary widely between factoring
companies. Just as you would get competing quotes for structured settlement
annuities, you should get at least two quotes from competing factoring
5. Your client will generally get more money and better service if you
consult with a factoring company that specializes in the insurance field and has
legal expertise to complete the transfer process rather than a general buyer of
receivables or an intermediary who lacks control of the transfer or funding
6. You should monitor the average length of time the factoring company you
choose takes to complete the transfer process and disperse funds to your client.
The benchmark is six to eight weeks. Unexplained delays beyond eight weeks will
cost your client money.
7. Throughout the transfer process the factoring company should keep you and
your client informed of the benchmarks and be proactive in resolving legal
issues that may arise.
8. In the case where your client decides to sell only partial payments, be
careful that your client does not agree to sell all payments in return for the
factoring company servicing the remaining unsold payments back to your client.
Servicing arrangements could jeopardize your client's recourse against an
annuity issuer in the event of a default. Furthermore, your client may not be
able to sell the remaining payments at a future date if they are serviced by a
9. It is acceptable for you to be compensated for your professional
assistance to your clients and referral to a reputable factoring company. You
decide. However, contrary to some assertions made in blogs, any fee you charge
will impact the best price available to your client. You should be careful that
your fee is reasonable in all circumstances.
Sovereign Funding Group has specialized in buying structured settlements for
6 years. We offer plaintiff brokers:
1. the benefit of six years of experience in preparing insurance annuities
and in-house legal expertise to make sure the transfer process is completed in a
2. the most money for your client's annuities by requiring our investors to
compete for each case thereby establishing the best market rate.
3. the fastest service by guaranteeing your client a price quote within two
hours of contact and sale documentation delivered the same day.
Compare our price and service level the next time one of your client's
contacts you. Call David Springer at 877-836-4661.