First Posted: 5/5/2015
Last week, I told you about Barbara Dymond, a 75-year-old retired nurse from Forty Fort who says she’s been getting the runaround from CCO Investment Services for three years, ever since they sold her a Transamerica variable annuity that would pay her $5,500 annually for life.
In December 2011, Dymond rolled over virtually all of her retirement funds — $100,000 — into the Transamerica Axiom variable annuity, having been assured by CCO, the investment unit of Citizens Bank, that she could earn a 5 percent return in 2012 by not taking any distributions that year. Meanwhile, she’d take Uncle Sam’s required minimum distribution from a separate IRA savings account worth $17,000.
In early 2012, however, somebody at CCO goofed and sent Dymond a $360 distribution, blowing her chance to earn the 5 percent growth. After almost three years of futile phone calls to CCO, she wrote to me that she felt “tricked.”
It soon became clear that the $360 withdrawal snafu was the least of Dymond’s problems. Turns out she had no idea that her Transamerica annuity was also packed with sneaky fees. I contacted CCO Investment Services Vice President of Media Relations Lauren DiGeronimo, who got back to me with a prepared statement saying that customers must review and sign paperwork that outlines all the fees when investments are made.
“For variable annuity transactions involving customers age 70 and above, we take the additional step of contacting the customer by phone to review the investment before completing the transaction,” added DiGeronimo.
Not so, says Dymond.
“No one did that for me,” she said. “Nobody called me and asked if I understood everything. “
Dymond recalls that during the CCO adviser’s sales pitch, he asked if she understood the annuity’s complex ins and outs.
“I told him it was all Greek. How could I understand everything?” she said. “I didn’t understand, which is why he took advantage of me. I had not a clue about the fees because he never told me.”
Last week, Dymond called Transamerica to ask exactly how much she’s paying in fees.
“They said so far, in three years, I’ve paid $3,121 in fees. They assured me there were no hidden fees, that this was it.”
They assured her wrong.
In fact, Transamerica documents reveal that fees on Dymond’s particular annuity include a “mortality and expense risk” fee of 1.15 percent, a “Retirement Income Max Rider” fee of 1.25 percent, and an “underlying sub-account expense” of 1.13 percent. All told, that’s 3.53 percent — more than $3,530 annually. Over three years, that adds up to a cool $10,600.
“It certainly doesn’t seem on the up-and-up at all,” she said. “I’d better get … out of there as soon as I can.”
But getting out now means she’ll fork out even more — $2,000 in surrender fees.
In response to last week’s column, Dymond got a call from CCO Investments. She was instructed to put her complaints in writing, and they’d see what they could do.
Dymond might have better luck sending her complaint to FINRA — the Financial Industry Regulatory Authority — which has recently issued an “Investor Alert” on variable annuities, particularly those with hard-sell pitches targeting seniors.
If only she’d been warned three years ago, says Dymond.
“I found out through you that I don’t have to pay all that money,” she told me. “I didn’t know I could pay less and maybe get more. Maybe my life could be a little easier.”
Anyone who believes they were wrongly sold a variable annuity can file a complaint with FINRA at www.finra.org/complaint or by writing to FINRA Investor Complaint Center, 9509 Key West Ave., Rockville, MD 20850.
