Current Independent Financial Group, LLC (Independent Financial) broker Gerhard Heuer (Heuer) has been subject to six customer complaints – many of which concern suitability concerns over recommendations for Variable Universal Life (VUL) policies. The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Heuer.
In April 2017 a customer complained that he was told that his VUL would remain active with the currently scheduled monthly premiums and requested $43,000 in damages. The claim was settled.
VUL are complex insurance and investment products that investors must fully understand the risks and benefits of prior to investing. One feature of a VUL policy is that the owner can allocate a portion of his premium payments to a separate sub-account that can be used to grow in value through investments. Monthly charges for the life insurance policy, including a cost of insurance charge and administrative fees, are deducted from the policy’s cash value. The cash value of the policy may increase or decrease based on the performance of the sub-account investments. In addition, the VUL policy terminates, or lapses, if at any time the net cash surrender value is insufficient to pay the monthly cost deductions. Upon termination of the policy, the remaining cash value becomes worthless.
Given the costs involved in purchasing VULs, brokers must be careful to ensure that the recommendation to invest in VULs is suitable for the client. For example, if a policy is too expensive for the client to continue to make premium contributions to the policy could lapse over time.
In addition, the number of disclosures with respect to Heuer is high relative to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Heuer entered the securities industry in 1988. From July 2002 until January 2016, Heuer was associated with Thrivent Investment Management. Since January 2016 Heuer has been associated with Independent Financial out of the firm’s Beaverton, Oregon office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.