Report: #83273

Complaint Review: Sun Life Financial - Keyport Life Insurance Company - Keyport Advisor Annuity

  • Submitted: Tue, March 09, 2004
  • Updated: Tue, October 05, 2004
  • Reported By: Granville Ohio
  • Sun Life Financial - Keyport Life Insurance Company - Keyport Advisor Annuity
    One Sun Life Executive Park SC 2132, Retirement Products And Services

Sun Life Financial; Keyport Life Insurance Company Rip-offs! I was sold a retirement annuity product, ("Keyport Advisor"), that cost me an estimated $80,000 loss. Wellesley Hills Nationwide

*Consumer Comment: Clarification

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In October 1987, I was sold a retirement annuity product by an unqualified Investment Advisor employee of Huntington National Banks, Columbus, Ohio USA. This product was the Keyport Life Insurance Company "Keyport Advisor" 7-Year Annuity. The Keyport Life Insurance Company products were purchased by Sun Life Financial Services, Inc. (Toronto, Canada and Wellesley, MA USA) in 2001. Sun Life Financial Services, Wellesley MA continues to market and manage Keyport Annuity products.

I invested over $164,000 of retirement funds in the Keyport Advisor Annuity. I was promised (written and verbal by Huntington Banks and Keyport Life Insurance Company): (a) unlimited potential for aggressive growth; (b) a high degree of financial investment flexibility; and (c) highly competent financial investment services support.

Once receiving the Keyport Advisor Annuity contract, I found out that I could not cancel this contract for at least seven years without a large penalty ($11,340 to $1,600 penalty, depending upon years from purchase). Further, I found out that this product was commonly suggested by local bank investment officers to banking clients due to the higher than average sales commissions paid.

Over time, I realized that NO PROFESSIONAL FINANCIAL SERVICES ASSISTANCE of any kind was available from Huntington National Banks, Keyport Life Insurance Company, or Sun Life Financial Services. Approximately every 6 months, I was mailed prospectuses from 7-14 mutual fund, stock fund or money market fund products in which I could chose to invest.

Over several years, it became apparent that the only funds available were of very low quality and rating, and in many cases showed consistent losses over the period of my investment (1987-2003). Never, in seven years, were stock or mutual fund products made available that were listed among the 500 top performers in the US in any category. For example, the only money market fund available always paid less than similar money market funds available through local banks. Following the 9/11 World Trade Center tragedy, Keyport continued to offer funds whose professional fund management staffs had been killed. Additionally, a service fee of over 1% was assessed to my accounts every year.

When I attempted to seek professional assistance from Keyport Life Insurance Company, I was treated rudely or ignored by the company customer service staff, and on several occasions was threatened by the legal staff of Keyport in writing for my efforts to remove my funds from the annuity without penalty. On several occasions, I was told by telephone customer service personnel employed by Keyport Life Insurance Company that they did not understand why any serious investor would purchase a Keyport Annuity product.

In my initial contract, I was allowed to transfer my funds among the few available stock, mutual fund and money market products at any time, without cost. When the stock market became increasingly volatile, I received a letter indicating that Keyport had decided to change the contract, such that money could be transferred only every 30 days. Thus, if another terrorist tragedy occurred, Keyport investors would be unable to remove their investment from stock-based products for up to 30 additional days. This change was made based a "fine print" sentence in the original contract indicating, in essence, that Keyport retained the "right to alter the contract of investors in any way they deemed suitable, without prior notification of investors".

While the stock market increased from approximately 5500 in 1987 to a high of over 12000, I realized a total investment gain of 8.74% in six years, or an average gain of 1.45% per year. When I finally withdrew my money following the sixth year, I was penalized over $1600. I estimate conservatively, based on the performances of other available products, that the Keyport Advisor Annuity cost me over $80,000 in potential investment gain.

Based on my experience, I strongly urge that no serious investor consider investment in Keyport annuity products. While there are many credible investment products on the market, the Keyport Annuity, now marketed and managed by Sun Life Financial Services, proved to be among the poorest possible. I further suggest that the advice of poorly trained and experienced investment employees of banks be ignored, as their actions may be more driven by commissions that by a thorough investigation of the historical performance of available investment products.

Granville, Ohio

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#1 Consumer Comment



Just a few comments of clarification......

I do not work for Keyport but I am an agent who sells variable annuities. Something that is very frustrating in this business is not only cleaning up the messes of inadequate fellow advisors but more so the ignorance I see amongst clients. I very rarely see a client participate in the education of the product that they are purchasing.

I constantly see the eyes "roll over" so to speak as I'm outlining the details of a particular investment.Some of these products are not rocket science but can be a little complicated and require the consumer's concentration.I demand that my clients know their products inside an out whether they like it or not (and because of situations like this letter).

When I came across this complaint I truly felt the need to clarify some differences between being "ripped off" and being a consumer who was affected by unfortunate market timing and lack of product understanding(as to not mislead consumers).

Nothing in the complaint truly had anything to do with "Keyport Finanical" (although the investments that they offer in their subaccounts are not outstanding they still had average 10 year return of 5-8% annually) or "SunLife" itself. First of all....a 1% service fee (industry standard) is a percentage of your returns that is retained for portfolio management costs- not unfair OR abnormal from any variable annuity or mutual fund.

Secondly....subaccounts are chosen at purchase, at which time each fund available for investment within the annuity is disclosed to the client- YOU HAVE EVERY RIGHT TO RESEARCH THESE SUBACCOUNTS (you even have to sign for them-which is something that should never be done without regard).

Their avarage annual yields are even made available to you with your materials. If these returns are not to a clients satisfaction it would be at this time BEFORE purchasing the contract to decide you would like to look into an alternative annuity (with funds that offer higher return potential). Money markets within mutual fund companies and variable annuities are NOT (I repeat NOT) meant to be competitive or compared to bank money markets EVER. They are not the same thing. If you are looking for short term liquid cash by all means go to a bank and do not purchase one through a VA-you will be disappointed. They serve a specific purpose for each unique investor but generally get used as a vehicle for avoiding market fluctuation (as a part of an overall strategy for your portfolio).

Also, transferring between these investments more than once in a 30 day period is excessive ("referred to as market timing"). You cannot time the market-simple but the hardest idea for investors to comprehend. Even in the middle of the World Trade disaster the worst thing for an investor to do is panic and sell all their stocks (something that was becoming an epidemic which is why many companies including Keyport put limitations on excessive trading/market timing).

Third....the fact that the seven year term/surrender schedule was not realized until after the contract was received in the mail is a huge sign that this particular investor didn't pay attention to what he was purchasing. The first thing I would want to know when I'm investing is..what is my commitment on time? Is it liquid?

Can I withdraw whenever I need to? And the bottom line is.....the regulatory agencies who govern the purchases of these contracts require that all this information be disclosed on the application before purchase and signed by the client. These complaintts listed in the letter all could have been avoided by asking questions and paying attention to the annuity application being signed. These things are not hidden and NOT difficult to find. Again, its not rocket science. Last.....unfortunately with the declining period in the stock market alot of investors felt burned.

Even ones who knew the "market risks" that were being taken on but when reality struck and we finally did go through a bear market it left a bitter taste in consumers mouths. Stories like the one in this letter do a gross diservice to consumers who can benefit from variable annuities/mutual funds (but unfortunately hear stories like these and do not understand that the fault isn't with the product but the person who didn't take the time to understand it). Lesson learned should be...PAY ATTENTION.

Like I tell my clients, if you don't comprehend the product then go over it until you do (ask me again,go to a family member you trust, get a second opinion, call the company or ask a friend-anything). I think our investments deserve as much attention as the cars we buy!!!!! You don't buy a car and let your eyes glaze over when the sales person is talking about annual interest, warranties or gallons per mile. Then why do that with your nest egg?
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