hio National Ending Broker Contracts And Annuity Trails For Advisors
Soreide Law is investigating possible claims on behalf of advisors who have contracted to sell annuities through Ohio National Financial Services Inc. (Cincinnati, Ohio) – a company that markets financial and insurance products through the Unites States and abroad. The firm is considered a top 20 issuer of variable annuities based on its $1,300,000,000.00 in annuity sales in 2017. Surprisingly; however, Ohio National reported in September 2018 that it would cease sales of retirement accounts and annuities. Even more surprisingly, Ohio National recently stated that on or about December 12, 2018, it will no longer pay commission trails to advisors that have sold its annuities.
Ohio National Financial Services Cutting Commission Trails; Severing Data Feeds
Ohio National sought to sell its annuity business to adopt a new strategy centered on disability income insurance and life insurance. Unfortunately, after having failed to generate a target buyout offer on variable annuities, Ohio National revealed that it will not be paying trailing commissions to certain representatives such as those who sold their annuities with a guaranteed minimum income benefit rider.
Apparently, Ohio National only intends to keep in place the trails and servicing abilities for advisors associated with Ohio National Equity Equities, Inc. (CRD#: 41081, Cincinnati, Ohio). Apparently, aside from Ohio National’s broker-dealer, the only broker-dealer spared from the impact is Morgan Stanley. As a result, many broker dealers are expected to be cut off from data feeds and annuity trails.
The firm faces backlash on the decision. Supposedly, stripping advisors’ abilities to service variable annuities interferes with their fiduciary obligations, negatively affecting policyholders. Particularly, the clients will likely be forced to consult Ohio National directly regarding buyout offers. This seemingly presents a risk that the clients’ best interests may not be served because of the advisors’ inability to vet those offers.
Ohio National Financial Services Sued For Breach Of Contract
Moreover, advisors now face a significant hit from a financial angle, as the gutting of trailing commissions impairs and devalues their book of business. As a result, advisors are likely to demand upfront commissions rather than any alternatives indicative of trailing commissions. One LPL Financial VP described Ohio National’s decision as “unprofessional and disrespectful.”
Ohio National has become subject of legal actions as a result of its decision. Particularly, since the decision was made, two lawsuits have been lodged against Ohio National. The claims were filed in the United States District Court for the Southern District of Ohio. One of the suits was brought by LPL Financial advisor Lance Browning; the other by broker-dealer, Veritas Independent Partners.
Browning contends that LPL’s selling agreement with Ohio National entitles him to commission trails totaling $89,000.00. His principal argument is that Ohio National was not allowed under contract to unilaterally terminate its obligation to pay the commission on existing annuities; the firm’s failure to conform to the contract was a breach. Veritas also claimed that Ohio National committed a breach of contract. Apparently, both cases could turn into class-actions.
Soreide Law Group Investigating Possible Remedies For Advisors
Lars Soreide Highest Ethical Standard Award 2018
Advisors who are under contract with Ohio National to be paid trailing commissions on annuities can call Soreide Law Group at (888) 760-6552 for a free consultation with experienced counsel regarding their legal rights and remedies.