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SCC News
Financial
MAY 13, 2019
RICHMOND — It is not uncommon for representatives of banks and investment firms to recommend financial products and services such as investment products to their clients. By cross-selling, financial professionals encourage investors to purchase securities related to their original investment. In some cases, these representatives may try to capitalize on a pre-existing positive relationship with a client to induce them to increase their investments or invest in a new product.
When done properly, this marketing technique can be lucrative for the firms and their representatives and can sometimes make sense for the client. While the practice is legal, it can backfire for consumers, particularly if a representative tries to push a product outside of their scope of knowledge or an unregistered securities product.
Ron Thomas, director of the State Corporation Commission’s Division of Securities and Retail Franchising, urges Virginians to take appropriate precautions whenever they invest. “In some cases, cross-selling may be mutually beneficial to financial firms and their clients. It allows these firms to inform clients about the range of financial products and services available,” he said. “At its worst, this common sales technique can mislead clients into acting against their best interests.”
Whenever investing, Thomas cautions Virginians to beware of unsolicited investment offers, aggressive sales tactics and promises of high returns with little or no risk. He encourages investors to protect their financial interests by asking questions and getting details about any investment offer in writing. Find out how the investment will generate returns, the time frame for payout, any associated costs and how your financial professional will be compensated. “Make sure an investment and the person offering it are registered and the investment suits your particular needs,” Thomas said.
To learn more, contact the SCC Division of Securities and Retail Franchising at 804-371-9051 or toll-free in Virginia at 1-800-552-7945. You may also visit the division’s website at www.scc.virginia.gov/pages/Consumer-Investments or the North American Securities Administrators Association’s website at http://www.nasaa.org/47635/informed-investor-advisory-cross-selling/.
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Contact: Katha Treanor (804) 371-9141
Financial
APR 15, 2019
RICHMOND — In our increasingly fast-paced and high-tech world, more and more investors are turning to robo-advisers to help them with their investing decisions. The State Corporation Commission’s (SCC) Division of Securities and Retail Franchising encourages Virginians to do their homework before investing with a robo-adviser, just as they would before investing with a human advisor.
A robo-adviser, also known as an automated investment advisor or digital advice platform, is an electronic platform that uses computer algorithms to provide automated financial planning services to clients based on such things as goals, risk tolerance and investment horizon. Robo-advisers typically come with lower fees than human investment advisers and require lower minimum investments. Easy-to-use smartphone apps and online portals make setting up an account with a robo-adviser convenient and quick, which also contributes to their increasing popularity.
Robo-advisers are relatively new to the investing landscape. “Robo-advisers may offer an easy and low-cost alternative to human financial professionals. However, they cannot calm investor jitters in times of market turmoil and may not be able to offer advice on how to adjust your portfolio to account for market fluctuations or special circumstances in your life,” said Ronald W. Thomas, director of the SCC’s Division of Securities and Retail Franchising.
Investment product offerings, fees, levels of service and overall approach can vary from one robo-adviser to the next. Thus, Thomas encourages Virginians to make sure they fully understand how a particular robo-adviser works before they invest. Thomas also urges investors to check the registration and disciplinary history of the firm offering robo-adviser services, research the company and its management and read online customer reviews.
To learn more, call the SCC’s Division of Securities and Retail Franchising in Richmond at 804-371-9051 or toll-free (in Virginia) at 1-800-552-7945. You may also visit the division’s website at www.scc.virginia.gov/pages/Consumer-Investments or the North American Securities Administrators Association’s website at www.nasaa.org.
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Contact: Katha Treanor (804) 371-9141
Financial
MAR 15, 2019
RICHMOND — The State Corporation Commission (SCC) will allow the public to comment on numerous premium rate increase requests pertaining to long-term care insurance issued in Virginia. Currently, approximately 25 insurance companies have filed premium increase requests for as many as 60 different long-term care insurance plans.
Over the past two years, the SCC’s Bureau of Insurance has received multiple requests from insurance carriers to increase premiums for long-term care insurance policies. In 2017, the Bureau approved 17 requests.
Long-term care insurance covers costs experienced by policyholders when going to a nursing home, being in an assisted living center, or receiving in-home care. These costs have risen dramatically over the years and covered individuals are receiving such care for longer periods than projected.
Many of the premium increase requests involve policies purchased many years ago. Currently, there are only about a dozen companies that continue to sell long-term care insurance.
In general, long-term care insurance premium increases are the result of projected claim costs being much higher than originally anticipated at the time the policy was issued. As a result, insurance carriers have sought premium increases to ensure that sufficient funds are available to pay claims over the life of the contracts.
Given the substantial and ongoing nature of premium rate increases associated with long-term care insurance, the Commission will receive presentations from certain insurance carriers on Tuesday, May 21, 2019 at 10 a.m. in a Commission courtroom on the second floor of the Tyler Building at 1300 East Main Street in downtown Richmond.
The Commission will also receive comments from the public at that presentation. Persons desiring to provide oral comments need to appear at 9:45 a.m. and sign in with the Commission bailiff.
Written comments may also be submitted in advance of the May presentation. The due date is April 22, 2019. Correspondence may be sent to the Clerk of the Commission, Document Control Center, PO Box 2118, Richmond, Virginia, 23218. All comments must refer to case number INS-2019-00041.
Written comments may also be submitted electronically via the SCC website at www.scc.virginia.gov/casecomments/Submit-Public-Comments.
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Contact: Ken Schrad (804) 371-9858