Alert: Please click here to read about recent developments in the Factored Structured Settlement (FSS) industry!

Get On The SMA Insider's List

Sign up to get new SMA offerings emailed to you & get the first pick. You'll also get our Buyer's Guide.

Making Certain your SMA is Safe

You may have heard about SMAs also known as Secondary Market Annuities, In-Force Annuities, Pre-Owned Annuities or, by their more clinical name, Factored Structured Settlements. You may have even purchased one or more or you may be learning about them for the very first time. In any event what they are is arguably the highest yielding, guaranteed, some money strategy in the United States of America, but there are caveats. As with all general account investments of insurance companies, the guarantee is only as strong as the underlying claims paying ability of the insurance company issuing the payments and unlike a traditional fixed annuity purchased directly from an insurance company, these unique investments must go through a court order process “26 USC § 5891” in order to transfer from seller to buyer. That said, the fact that there’s a court order with your name in it saying that these payments belong to you doesn’t mean that someone can’t challenge that order for any number of reasons under the sun. If you are looking for straight talk regarding your SMA annuity purchase, contact Somerset Wealth Strategies at 800-813-4000 so that we can help you navigate this complicated and often hazardous process. In July of 2010, I was quoted in the Wall Street Journal by Jason Zweig cautioning investors to be careful. At that time I equated this asset class to Fugu that special kind of sushi that’s a wonderful delicacy for people all over the world but prepared by someone unqualified to do so it could be extremely harmful, if not fatal, to the people on the receiving end.

Bottom line; it’s wise to do your homework to make sure your SMA is safe and to seek out the best opportunities for you and your family but approach all investments with extreme caution and do your homework. Often times, people feel comfortable investing in something because 10,000 people did it before them and that many people can’t be wrong, but what I’ve learned is that 10,000 people can be stupid and you shouldn’t accept a majority as confirmation that something is safe. In other words, if you’re participating in this asset class, or any investment, make sure you find a sushi chef with the fugu certification (I understand it takes about 7 years and that’s why independent outside counsel  continues to review all of our cases).


Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>