Bentzen Financial

Shell Game

There are companies out there calling themselves “factoring exchanges” or similar.  They tout themselves as being superior by virtue of the fact that they collect an annuitant’s details and then “shop” several funding companies to get the “best” deal.  On the surface, the business model appears sound; the more firms involved, the better the deal.  Well, not exactly!  You have to step back and consider who these factoring exchanges are selling deals to since they’re simply the middlemen.  The exchange doesn’t process the paperwork nor does it deal with the annuitant after the fact.  The proverbial chain is only as strong as its weakest link; hence, any business ethics the exchange broker may have are nearly irrelevant since the experience the annuitant has during most of the process rests entirely with the business ethics of the funding company to which the annuitant is referred.   There’s a good reason that the exchange companies don’t openly advertise the factoring firms they deal with. 

In that respect, my understanding is that the larger factoring companies typically bid on these deals when they see an opportunity or need product to complete a securitization.  We all know who they are.  Once again, they are the ones that are infamous for pressuring and manipulating annuitants to enter into a transaction, convincing annuitants to sell more of their payments than needed and actively soliciting annuitants into repeat deals.  It doesn’t take much imagination to deduce what will likely happen should an annuitant change his mind after getting a quote.

When exchange brokers don’t handle the processing, how can they possibly control how the case is handled after the fact?  They may receive a promise from the funding company to act in certain way, but how can it be enforced?  Many factoring companies play the odds; buy some payments at a decent price, only to turn around and gouge annuitants on their remaining payments shortly down the road.  The truth of the matter is that exchange brokers usually just secure a price, get their commissions, and then walk away from the annuitants. 

Bentzen Financial competes with these exchanges on a regular basis and the rates they have access to are no better than ours.  Further, the annuitant deals with us from start to finish and we guarantee that we will treat your client with honesty and integrity.  The referrals you make ultimately reflect back on you, so why risk it?

What's Your Position?

So you think that none of your structured settlement cases are being factored just because you hate factoring and all that you believe it stands for?  Not quite!  A life company representative once remarked that the two largest factoring companies process about 800 cases per month and another recent article estimated that the same two companies process just over 700 cases per month.  If you divide by the number of brokers, it equates to an average of at least one of your cases being factored per month by these two companies alone.  Now these are the same companies that advertise prolifically and don’t exactly have a great track record when it comes to honesty and integrity.  We all know who they are.  They’re the ones that are notorious for the “boiler room” call centers whose sales associates pressure and manipulate annuitants to enter into a transaction; threaten legal action when annuitants change their mind; convince annuitants to sell more of their payments than required to meet their needs; and actively solicit annuitants to enter into repeat deals.

So what do you do when an annuitant calls asking how to obtain liquidity from a structured settlement?  I know that many want nothing to do with the topic of factoring whatsoever.  Some have even likened it to collaborating with the enemy, which is understandable since our industry undoes what you have worked diligently to put together.  However, if you do nothing, these annuitants will likely end up calling one of the factoring companies described above because they are unaware that there are better options out there.  It’s common knowledge in our industry that their call center associates are tasked with pressuring and coercing annuitants out of every payment in order to meet their sales quotas.  That said, I’m not suggesting that brokers embrace factoring.  I simply want brokers to understand the irony that by not getting involved, they’re ultimately benefiting the factoring companies that your industry repeatedly chastises; the ones that negatively portray structured settlements through misleading ads preaching the alleged virtues of “cash now”. 

If you do choose to consult with these annuitants, my first recommendation is to look at other alternatives to start.  Convince the annuitants that factoring isn’t the quick panacea that the advertisers make it out to be; however, that said, it has its place for some annuitants who need liquidity.  In many instances, a factoring transaction truly is the most viable option.  As such, my second recommendation is to refer the annuitant to a reputable factoring company to explore further options.  In my opinion, a reputable company should at least be able to guarantee that they will do the following:

• Provide the annuitant reliable and honest information
• Offer consistently fair pricing
• Never “up-sell” the annuitant into factoring more than is required
• Not pressure and harass the annuitant into completing a deal
• Not employ bait-and-switch sales tactics
• Never solicit the annuitant into a repeat transaction

At Bentzen Financial, we believe in integrity and guarantee that we practice what we preach.