Compliance September 24, 2021

Insurance Agents Charged With Duping California Educators Into Reinvesting Retirement Money

The owner of a 403(b) plan administration firm and another insurance agent allegedly convinced educators to roll retirement plan money into an IRA to invest in the owner’s companies, which were in poor financial shape.

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Insurance agents Robert Andrew Lotter and Charles Albert Major have been charged with multiple counts of securities fraud violations with aggravated white collar and financial elder abuse enhancements after allegedly defrauding California school system employees with high-risk investments.

According to an announcement by the California Department of Insurance, Lotter owned and operated an insurance agency, R.A. Lotter Insurance Marketing, Inc., and Major is a licensed insurance agent. They contacted clients of the insurance agency and used various schemes to fraudulently obtain victims’ private financial information in order to identify potential investors for Lotter’s high-risk investments including leading some victims to believe Lotter’s insurance agency was affiliated with the California State Teacher’s Retirement System (CalSTRS).

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Lotter also owns The TDS Group, a 403(b) plan administrator for school districts throughout California. Some TDS Group clients were victimized after they were contacted by TDS Group representatives, who are also insurance agents for R.A. Lotter Insurance operating under doing business as TDS Benefits & Insurance Services.

The 23 victims identified by the California Department of Insurance were solicited and sold stock certificates in Lotter’s companies, eAgency, Inc. and Mymobilewatchdog, Inc. School system employees who did not have enough liquid assets to invest were encouraged by Lotter and Major to rollover money from their retirement accounts into self-directed individual retirement accounts (IRAs), which were used to invest in Lotter’s companies. And, at least one educator was convinced to withdraw money from their pension to invest in Lotter’s companies.

Both eAgency, Inc. and Mymobilewatchdog, Inc., had poor financial statuses including unpaid financial obligations to prior investors, according to the announcement. Lotter and Major did not make their clients aware of the poor financial statuses of the companies and they did not notify victims when the alleged lucrative partnerships fell through. The California Department of Insurance says the 23 victims lost more than $3,036,300.

The agency says the charges are in addition to charges made in November and in May. On November 24, 2020, Lotter and Major were arrested on similar charges of securities fraud and burglary after allegedly defrauding more than 20 victims out of over $4 million. On May 17, the California Department of Insurance announced additional charges were filed.

Following announcements of the arrests and charges, additional consumers contacted the agency and identified themselves as victims who also purchased stock in Lotter’s companies.

Data and Research September 24, 2021

BIPOC Employees Have Multiple Concerns About Retirement

Allianz Life says a nuanced approach is necessary to help Black, Indigenous, Hispanic and Asian/Asian American employees achieve their goals.

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Half or more of Black, Indigenous, and people of color (BIPOC), including Hispanic and Asian/Asian Americans, believe they won’t have enough savings to retire, according to the 2021 Retirement Risk Readiness Study from Allianz Life Insurance Company of North America.

The study found that 52% of Black/African American; 56% of Hispanic; and 62% of Asian/Asian American employees worry over having enough savings for retirement. Additionally, 54% of Black/African American respondents say the rising costs of living will prevent them from enjoying their retirement, while 67% of Hispanic respondents and 74% of Asian/Asian American respondents believe the same.

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Other top concerns about retirement included high health care costs (55% of Black/African American; 66% of Hispanic; and 76% of Asian/Asian American respondents), and the inability to take care of oneself (47% of Black/African American; 60% of Hispanic; and 69% of Asian/Asian American individuals).

Running out of money before death, market downturns hurting savings and becoming a financial burden were other worries respondents cited.

Plan sponsors can take steps to alleviate financial concerns for BIPOC employees and help them take steps to save more for retirement. Conducting pay equity analysis or pay audits, for example, clarifies pay gaps within organizations and the size of the discrepancy. A 2021 survey by PayScale, a U.S. compensation data and software company, had found that even with the same education and qualifications, Black men only received 99 cents for every $1 paid to white men, while Black women receive 97 cents.

The Economic Policy Institute (EPI) found that without taking the level of education and qualifications into account, Latina women make just 53 cents for every $1 a non-Hispanic white male makes. Asian American and Pacific Islander (AAPI) women make 85 cents for every dollar paid to white men, according to the National Women’s Law Center.

Plan sponsors can also provide access to financial professionals. The Allianz Life study found fewer BIPOC respondents are getting professional help with their finances than white Americans (38% Black/African American; 44% Hispanic; 36% Asian/Asian American; versus 46% white).

When asked why they are not currently working with a financial professional, more than one-third (37%) of Black/African American respondents said it was because they “don’t have enough money,” versus only 30% of Hispanic and Asian/Asian American respondents. For Asian/Asian Americans, the biggest barrier was cost, with 45% indicating it “costs too much” to work with a financial professional versus 27% of Black/African American and 26% of Hispanic respondents.

Allianz Life says these findings confirm the complexity surrounding retirement planning for BIPOC communities, and the nuanced approach necessary to help each group achieve their financial goals. “While it’s logical to assume that different ethnic groups have different priorities when planning for retirement, it’s eye-opening to see just how varied the level of their concerns are and how that perspective likely affects their approach to spending and saving,” says Travis Walker, Advisor Specialist, Allianz Life. “It’s important for the financial services industry to recognize these unique differences, because they illustrate why financial professionals should consider cultural dynamics when helping BIPOC communities plan for their financial future.”

The 2021 Retirement Risk Readiness Study was conducted with 1,000 individuals age 25 or older, and with an annual household income of $50,000 as a single person or $75,000 as a married or partnered person, or with investable assets of over $150,000. The study included responses from 396 Black/African, 386 Hispanic; and 370 Asian/Asian American individuals.

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