Sun Life Annuities Can Be A Problem for Investors

Especially if the annuities subaccounts are investing in hedge funds.

FINRA recently investigated the following  firms in connection with  variable annuities( Foresee Strategies Insurance Funds and Sala Multi Series Fund) issued by Sun Life Financial, Inc. that contained sub-accounts with hedge fund investments:

  • Geneos Wealth Management
  • Lincoln Financial Network
  • National Planning Corp.
  • SagePoint Financial, Inc.
  • FSC Securities 

The strategy of the subaccount manager was to invest in options in the S&P 500, using both put and call options. This strategy is known as a strangle and counts on the hope that the market doesn't move very hard up or down. In a period of high volatility, as happened in Septmeber 2008, this strategy does not work. In this case the subject annuities were nearly wiped out completely. 

There are lots and lots of annuities out there and investors need to be very wary when purchasing one. Variable annuities tend to be riskier because they are dependent upon the ups and downs of the stock market. Principal is not generally guaranteed in variable annuities so when the markets go down, the variable annuity will lose money. This may not be suitable for those on fixed incomes who are dependent upon their nest egg to survive and who cannot afford to lose capital.

If you have questions about your stock brokerage account, please give us a call. We have been helping investors recover stock market losses for 25 years.

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Rex Securities Law

561 391 1900



 
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