Report: #1140496

Complaint Review: Midland National

  • Submitted: Mon, April 21, 2014
  • Updated: Mon, April 21, 2014
  • Reported By: consumer — La Verne California
  • Midland National


Midland National Sammons Financial Group failure to explain contract properly Anaheim Nationwide

*REBUTTAL Owner of company: Typos

*UPDATE Employee: Know Your Agent

Show customers why they should trust your business over your competitors...

Let me preface that I am a teacher, and I have a reasonable amount of knowledge about investing, etc.

I met with a local representative out of Anaheim, Matthew Korsmo to review my retirement.

I already have heavy investments in my teacher retirement account but I was looking to supplement with a 403b (TSA)

Matthew stated that my investment has a minimal risk.  He stated that I would be guaranteed 2% regardless of the market, and I would get a 10% premium bonus for any premium. I invested 150.00 a month so I received a 15.00 bonus. Thought I was making a smart investment.

Forward to September 2013.  My wife's boss is also a financial planner and offered to look over my TSA for me.

What I found out is that there is an index cap on my account of 4.5%: which means that I cannot earn more than 4.5% on my investment regardless of the market.  Meanwhile, the index % gain on my account was/is 16.51%: which is the money I could've earned on my money had their not been a cap. 

First, Matt never explained to me that their was a cap on the investment. Why would I agree to a cap on my money--the purpose is to maximize returns.

Secondly, how is it that Midland makes more money on my investments than I do (difference between 16.51-4.5% = their profit of 12%).

When I called and spoke to Matt regarding the cap, he said "well, that is how our company makes money."

Additionally, I am in this policy for 10 years.  I called Midland to see about removing my money or trying to do something else with it, and they stated I can't do anything unless my employment is terminated, or I become 59 1/2 ( I am 42 and still employed).

I am researching how to do an investment loss recovery action for "failure to explain risks and dangers of investments recommended."

This is a highly deceptive practice and the agent and company were not honest about my investment.  I never would have agreed to a cap if I had knowingly known what it was.  And, the response from the agent and company has been "well, we have your money and there is nothing you can do..ha, ha.--thanks for the profit."

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Updates & Rebuttals


#1 REBUTTAL Owner of company


AUTHOR: ELC123 - ()

I'm not sure exactly what happens with these reports grammatically or with spelling, but the rebuttal that I submitted does not match with the one that I printed by using the "Print Screen" command on my laptop computer.  I apologize for any errors and hope for more accurate listings in the future.  I think that excellent grammar and spelling are a strong indicator of the accuracy and attention that an advisor will pass along to clients.  Please excuse the mistakes that I just read in my previous post.

Thank you.

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#2 UPDATE Employee

Know Your Agent

AUTHOR: ELC123 - ()

As a teacher I'm sure you are well educated and intelligent.  What your agent did not transparently explain is how index annuities are an entirely different than traditional investments.

I'm not a direct employee of Midland National...I am an agent also.  I work with my brother and my father in our family agency, with a combined total of close to 50 years in the business of investments and insurance.

We became associated with Midland National in 2007 because we were tired of clients calling and complaining about the ups and downs with their hard earned savings in the market.  Eventually we totally discontinued doing traditional investments in stocks, bonds, mutual funds, etc.

Then came the market correction of 2008.  The folks that chose not to place at least a portion of their money into an index annuity were devastated by their 30% to 40% losses of the funds that they were relying on for retirement.  Those that invested their retirement savings into index annuities thanked us constantly for months after hearing the grief from their family, friends, and neighbors that did not.

Here's the can't have the best of both worlds and make the maximum market gain with no market loss.  But you can have NO market loss and LIMITED market linked gain. 

What we tell our clients is this..."Take what you couldn't live without and put it in an index annuity with Midland, Allianz, Aviva, whoever.  That money is secure because it's not directly in the market and it's insured by an insurance company that is required to have the reserves to at least give back what you've invested.  AND there is the potential for LIMITED market linked gains with several crediting methods.  AND if you want a guaranteed rate of return (like Matthew told you) then you can put as much as you'd like into the fixed account (which right now is anywhere between 1.5% and 2.55% and is a much better rate than a .25% bank CD).  Then take what you could stand to lose (your play money) and buy stocks, bonds, mutual funds, options, futures, precious metals, or whatever, but you might have to pay your broker or money manager, along with other potential fees."

So, with an index annuity it's limited gains and NO losses.  And there are NO fees or sales charges.  If you invest $100,000 you keep $100,000.  And then you get the 10% bonus on top of that, so actually you start with $110,000.

If you're needing to withdraw money before the surrender charge period is expired, at age 59 1/2 you can take out up to 10% per year.  Remember, it's an annuity, and those are the annuity rules.  After the surrender charge period is over, and you've turned 59 1/2 it's all yours to cash out, annuitize, set up a lifetime income, or whatever you want to do with's your money.

Another thing to consider is this:  The reason that the surrender charge schedule looks like it's excessive is simply because Midland is recapturing the 10% bonus money that they gave you on day one.  If you take the 18% surrender charge in year one and subtract the funds that they want back because you didn't keep the contract, you're left with an 8% surrender charge which is equal to or better than most other annuity products.

So in summary, Midland is a reputable company, established in 1906, and pioneers in the index annuity concept since 1995.  They are incredibly strong financially and they maintain a staff a very creative, wise, and professional individuals.  You may have encountered a rotten egg that didn't properly match your needs to the product you were encouraged to use for your retirement dollars.  But rest assured, when your wife's +16% this year turns into a -40% when the market corrects again, you will be smiling ear to ear knowing that yours didn't lose a red cent.

With an index annuity you never have to regain market losses.  Therefore, specifically addressing your issue with the 4.5% cap, if you invested $100,000 directly into the S&P 500 index in 1999, in 2013 you would have approximately $138,000 based on the ups and downs in the market.  Had you invested that in an index annuity at Midland National with an annual point to point crediting method linked to the S&P 500 index at the 4.5% cap you would have approximately $153,000.  Over a 14 year period, your surrender charge would be expired and you'd have made $15,000 more with the index annuity because you never had to recover from the downturns in the market.

We're confident that in the long run Midland National's index annuities have the potential to outperform standard market investments with the added benefit of safety, security, and peace of mind knowing that cyclical downside volatility has no impact on what you'll rely on for your retirement.


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