American Greed
A Personal and Professional Look at How Greed Caused the Great Recession of 2008
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“ I can guarantee you 22% on your money with no risk”. Unidentified Financial Sales Representative The statement above was made by a competitor’s representative to one of my clients in 1992. Frequently, I would find competitors making similar ridiculous claims. My client on the receiving end of this claim, was 56 years old woman who desperately craving retirement. She was looking forward to relaxing, traveling, and a stress free retirement.
When claims like this are made to people in situations similar to this client’s, their eyes pop with opportunity. They believe that if this representative is making this claim, and he works for a reputable company, it has to be true. With no questions or cynicism at all, my client was ready to pounce on it.
Even though my relationship with this client and the majority of my clients was very good, I witnessed people over the years jump at these perceived chances for big financial return. When this did happen, the client normally wouldn’t call me, they believed the claim to be true and went for it. I also think they were scared to admit they were leaving me for something that they thought was better. With this particular client, I was lucky, she called me asking if I could do the same. The competing representative was basing his claim about returns on past performance. The past performance was of a specific funding option within a particular variable annuity contract. This representative highlighted the one year, past performance of an investment option within that contract. He did not disclose the fund’s performance over a longer period of time. He also did not explain how funds change value, that performance is not guaranteed and that past performance cannot be relied upon for future results. Lastly he did not disclose the long term commitment in the contract of 13 years. The client would not have had full access to her account due to this contractual maturity. Being on the verge of retirement her time line did not match the commitment to substantiate such risk.
These types of investments, referred to as variable annuities, are generally for the long term and definitely for individuals who can wait at least five years before needing access to their funds. My client did not have the appetite for the risky nature of the fund he was touting. The promise of a 22% return clouded her better judgment.
As her Representative, I felt obliged to provide her with the proper guidance and I took that responsibility very seriously. In instances like this one I would think back to my time at the nursing home when I could see how some people ended up in retirement. I not only liked this client as she was always nice to me and treated me like a son but I didn’t want to see her get hurt financially.
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About the Book
American Greed is both a personal and professional look at how greed caused the Great Recession in 2008.Leading up to this particular recession were steep declines in the housing market combined with the banking system sliding to the verge of collapse. The news of the day were full of stories about the mismanagement of risk at financial service companies who nevertheless paid out huge bonuses to executives, rewarding them for ruining their own companies. Americans were largely over-extended, with tremendous amounts of debt on charge cards and mortgages they couldn’t afford, combined with rising unemployment, tightening credit and increasing expenses such as gasoline, electricity, and food. All of these elements made for the perfect economic storm. As an Investment Advisor Representative for MetLife since 1992, I have seen how greed has impacted people’s lives. I witnessed patterns of abuse, the inability of people to plan for anything financial or personal and in some cases situations of illegalities. By meeting with numerous people over a long period of time, I gained first hand exposure and bore witness to what was happening in a very unique and particular way. At the time I was writing this book, I had 1,300 clients and met with thousands of prospects over the years to assist them with retirement planning.
About the Author
Michael S. Rothberg has been an Investment Advisor Representative with MetLife Resource MLR) since January of 1992. MetLife Resources is a division of MetLife that focuses on the k-12 and non-profit marketplace.
Since 1992, Michael has been a perennial sales leader at MLR, qualifying for the Leaders Conferences 15 out of 18 years. The qualifications to attain these conferences have put him in the top 1% of MetLife sales producers. For seven of those qualifying years, Michael reached the prestigious level of Platinum Club. In 2008, Michael was honored in Whistler, British Columbia, Canada with the MetLife Resources 2007 Award in Excellence.