Lately I received some comments on two related old posts: $10,000 Lesson On Variable Universal Life (VUL) and What Is WFG and What Does It Do? I’m pretty sure most of you don’t monitor the comments on old posts like I do. I’m using these to lead a discussion on the need for a consumer financial protection agency.
From Jaymz on Variable Universal Life insurance (VUL):
"Oh yeah and idiots that think "no load funds" are the way to go, think about it real hard. The company charging the least amonut [sic] to manage your money is the best right. hahahahaha. If you were good at doing something would you charge the cheapest price? Hell no. Simply put the better portfolio managers are going to charge more, BECAUSE THEY GET HIGHER RETURNS, SO THE FEE IS WORTH IT BECAUSE YOUR NET GAIN IS HIGHER. No load funds typically track what the major indices do so they are easy to manage hence cheap. You get what you pay for."
From Lazyboy on World Financial Group (WFG), a company that sells VUL through a multi-level marketing program:
"You konw guys out there i’m a lazy boy as my name but i make around 100k a year can you do that? by just open your month and talk so you do ,cause you guy can do alot of reseach of a company why don’t you reseaching yourself to see you can find out thing you really are.
But anyway i know you can not do it because you guy are american not america
let me remind you guy what Obama said last year , what he did last year and what he promis last year now more than a year ready he still to trying to looking anther ex. to said why he can not done it .
Let me tell why, because me same as AMERICA PRESIDENT OF UNITED STATE only konw how to talk but DONT KNOW HOW TO WORK are you agree!"
I’m not making these up. They came from salespeople pushing VUL and from salespeople recruiting downlines for pushing VUL. There are several more like these in the WFG post.
I don’t know if I should laugh or cry. Obviously shenanigans like this are happening every day. People are sold a bill of goods because they don’t know better and because the salespeople are skillful. Now, should we protect people from such mishaps? If yes, how?
I touched upon this subject a little bit in a previous post Read the Contract and Protect the Consumer. I said there should be an independent body that puts a score on service contracts and that companies should be required to display such scores. I’ve seen letter grades in big bold letters in restaurant windows. Obviously it can be done.
There was a proposal in congress to create a consumer financial protection agency. I have not followed the politics closely but last I heard it was either dying or being watered down. Even at its full scale, I think the proposed agency only puts out more required disclosures and maybe enforces a minimal standard.
I don’t think disclosure-based consumer protection is working, as evidenced by the sales of inappropriate products to consumers who can’t tell a good product from a bad one. Your thoughts?