The Survive and Thrive Boomer Guide

Proposed model annuity regulation benefits industry, not consumers, consumer groups say

State insurance regulators on the National Association of Insurance Commissioners’ Life Insurance and Annuities Committee should reject a proposed industry friendly, anti-consumer annuity model regulation, the Center for Economic Justice and Consumer Federation of America said in a letter to the committee. They should continue work to create a true “best interest” standard of care for insurers, agents, and brokers to use when selling complex annuity products to consumers.

“The fact that all the industry trade associations of insurers and agents selling annuities are euphoric about the proposed revisions while consumer groups are aghast at the anti-consumer nature of the proposal is stark evidence of how biased the proposal is in favor of industry interests over consumers,” said Birny Birnbaum, executive director for the center. “By allowing insurers and producers to falsely claim to be acting in consumers’ best interest when there is no such requirement and when there is no meaningful constraint on conflicts of interest that would compromise advice given to a consumer, the proposal will mislead consumers into expecting protections the rule does not provide.”

The center and federation point to shortcomings in the current draft:

Corporations keep breaking the law due to declining federal prosecutions

Corporations keep breaking the law, and the U.S. Department of Justice keeps refusing to prosecute them, a Public Citizen report finds. The DOJ’s continued refusal to bring criminal prosecutions against big banks, big pharma, and other big businesses that violate the law has led to a failure to deter repeat offenders, according to the report.

Instead of prosecuting corporations, the DOJ, starting in the early 2000s, has increasingly relied on agreements that prosecutors and corporate defense attorneys negotiate behind closed doors to keep corporations – usually the largest – out of the criminal justice system.

“If the Justice Department wants to deter corporate crime, it must stop bending over backward to protect corporations and start enforcing the law,” said Rick Claypool, a Public Citizen research director and author of the report. “Our country is facing an unprecedented corporate crime wave. To stop it, we must prosecute corporate criminals.”

CFPB and seven states launch ‘innovation network’ that will approve new risky financial products and protect them from enforcement

Under the Trump administration, the federal agency that’s supposed to protect consumers from Wall Street and financial predators has thought of yet another way to strip consumers of their protections. The Consumer Financial Protection Bureau or CFPB announced Tuesday that, working with seven state regulators, it launched the American Consumer Financial Innovation Network or ACFIN, a network that it said would "enhance coordination among federal and state regulators to facilitate financial innovation."

The CFPB invited all state regulators to join ACFIN, and the attorneys general of Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah took the offer.

Consumer advocates criticized the CFPB action because it gives banks, fintech companies, and other corporations no-action letters and approvals that will protect companies from enforcement and determine potentially new risky financial products and services to be in compliance with the law.

Broker in pension scam, who settles with CFPB and Arkansas, unable to pay most of repayment to consumers

The Consumer Financial Protection Bureau or CFPB and the Arkansas Attorney General’s Office filed a proposed settlement Wednesday with a securities broker for allegedly misrepresenting high-interest loans to veterans and other consumers in exchange for future rights to their pensions.

Andrew Gamber and his three companies – Voyager Financial Group, BAIC Inc., and SoBell Corp. – would be banned from the industry if a judge approves the proposed settlement.

The CFPB and the state agency alleged in a lawsuit that Gamber and his companies misrepresented that the contracts were valid when they were actually illegal loans, that the product wasn’t a high-interest loan, and when consumers would receive their funds. They also failed to inform consumers of the interest rate on the loan, according to the lawsuit.

How to plan for retirement

It’s never too early to start saving for retirement. Compound interest will help your savings grow over the years, so the earlier you start saving, the better.

When you’re job hunting, be sure to compare the types of retirement savings plans offered, if any. Most companies no longer offer traditional pensions, which guarantee a monthly income in retirement and place the investment risk on the plan provider. Instead, they provide a match to employee savings in a 401(k), which places the investment risk on individual employees, asking them to choose their own retirement investments with no guaranteed benefits. 

A 401(k) is a tax deferred account, meaning taxes are paid when you withdraw money. If you withdraw money before age 59½, you’ll pay a penalty. You can contribute up to $19,00 a year. You’ll have a specific number of investments to choose from in your employer’s plan.

How to track your spending

Tracking your spending lets you know where your money is actually going. At the end of the month, you’ll know where you are with your finances. That’s what you need to know: how far ahead or behind you are at month’s end.

Most consumers have a good idea about the cost of their fixed monthly expenses – bills that stay the same each month. It’s those expenses that may change from month to month that can be disruptive.

For consumers having a difficult time figuring out where their money goes, there are many ways to track their spending:

How to choose a financial advisor

In these complex financial times, it’s good idea to have a financial advisor on your team. You need to pick out one as carefully as you would a doctor or dentist.

A financial advisor will review your total financial picture and offer advice on how to invest money. The advisor will take into consideration income, goals, objectives, and attitude toward financial risk.

A certified financial planner is a good choice because requirements for certification include training, an exam, and continuing education.

Crowdfunding scheme operator who failed to deliver charged by FTC

The operator of a crowdfunding scheme who told consumers he was raising money to develop a high-tech backpack and other products, but failed to deliver any of the products and instead used most of the funds for himself, is being sued by the Federal Trade Commission.

In its lawsuit, the FTC alleges that Douglas Monahan and his company iBackPack of Texas, raised more than $800,000 from consumers through four crowdfunding campaigns. Monahan falsely claimed the funds would be used to develop products such as the “iBackPack,” which would include batteries for charging laptops and phones, cables, and a Bluetooth speaker.

“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “But you do have to use the money to work on your idea – or expect to hear from the FTC.”

How to improve your finances during Financial Literacy Month

It’s a good time during April’s Financial Literacy Month to take a look at how you handle your finances.

What is financial literacy? It’s knowing how to manage your personal finances.

How are Americans doing with financial literacy? In a survey of 1,500 people, respondents estimated that lacking knowledge about personal finances cost them an average of $1,230 in 2018, according to a study by the National Financial Educators Council.

What can you do to improve your financial literacy?

Take a look at your finances.

If you don’t have one, you need a budget. It’s a financial plan that will help you reach your goals. To develop a budget, you’ll need to keep track of your spending. Write down what your fixed monthly expenses are such as car payments and rent or mortgage payments. Determine what your periodic expenses are. They include items such as vacations and tax payments. Then you’ll need to track your variable expenses – food, clothing, transportation, and entertainment, costs that probably change every month.

April is Financial Literacy Month

Financial Literacy Month has been recognized in United States in April since 2003. Its purpose is to advance financial literacy through promoting and supporting effectiveness in financial education.

Dozens of organizations offer activities during Financial Literacy Month to call attention to the need for financial literacy and the work they are doing on it.

The Jump$tart Coalition is the original promoter of April as Financial Literacy Month. It’s a coalition of more than 100 organizations from business, finance, academia, education, and government, as well as a network of 51 state organizations, which share a commitment to “financial smarts for students.”

Here are organizations that provide basic financial literacy, according to the Office of the Comptroller of the Currency: