(Pittsburgh Post-Gazette) A 68-year-old Arlington woman who spent three years complaining that a former PNC Bank financial adviser misled her into spending her retirement savings to buy an annuity will receive a refund, although the Pittsburgh bank and New York Life Insurance Co. officials continue to defend their handling of the situation.
Deborah Clark said she didn’t understand what an annuity was when she discovered three years ago that she no longer had access to the $65,475 she gave her adviser at PNC Investments.
With the contract she signed, the money she invested would be tied up for life, although she was entitled to receive a monthly check for $299 for as long as she lived.
Ms. Clark’s initial goal was to make sure that the $107,000 she had saved in her retirement account would generate enough income to pay her $242-a-month health insurance premium. She met with a PNC investment adviser, who told her she would need to invest $65,475.
Ms. Clark said the meeting was brief and to the point. There was no discussion of where the money would be invested.
An annuity is not an investment in stocks and bonds. It is a contract with an insurance company. Essentially, the consumer makes either a single payment or a series of payments to an insurance company. In return, the company invests the money and agrees to make regular payments to the consumer, which can be guaranteed for life.
After realizing about a year later that she could not withdraw her money, Ms. Clark filed complaints at the bank against her financial adviser, Nathan Garcia, who had worked for PNC Investments at the time. She complained to New York Life, the insurance company that guaranteed the annuity. She also complained to the Pennsylvania Insurance Department.
She insisted that Mr. Garcia never explained to her what an annuity was or how it worked and that she wanted her money back. The Pittsburgh-Post-Gazette wrote about her dilemma recently.
In May 2017, a state official wrote to her, explaining that the Pennsylvania Insurance Department could not find any statutory violation with the handling of her annuity contract. PNC and New York Life also cleared the transaction.
But, last week, a representative from PNC Bank informed Ms. Clark that the bank would cancel the annuity and send her a check for $53,175, an amount that represents all of what she invested minus monthly payments she has already received from the annuity.
“After three years, they finally did what I asked them to do from the beginning,” said Ms. Clark, who retired four years ago from UPMC Presbyterian hospital, where she worked for 36 years in administration.
PNC Bank spokeswoman Marcey Zwiebel confirmed that the bank has reached a resolution with Ms. Clark, but noted PNC does not acknowledge any wrongdoing.
“We continue to stand by how this was handled,” Ms. Zwiebel said. “We believe the matter was properly handled from the beginning and we continue to stand by that.”
Mr. Garcia, the PNC investment adviser who sold the annuity to Ms. Clark, now works for Confluence Financial Partners, Downtown. He declined to comment for this report.
In the deal, Ms. Clark purchased a single premium guaranteed life annuity that was guaranteed by New York Life Insurance Co.
Her contract stated that if she died before receiving the full amount of the $65,475, she invested, her beneficiaries would have received any remaining payments in a lump sum. Annuity contracts are permanent arrangements that usually cannot be reversed,
New York Life informed Ms. Clark in a letter dated June 7, 2018, that the sale of the annuity could not be reversed or altered. PNC Investments followed up that decision in a letter dated Feb. 12, 2019, saying the bank had reviewed the case and was in agreement with the findings of the investigation performed by New York Life.
“We will not be offering the refund of the total premium as requested,” the PNC Bank letter in February said. “As such, PNC Investments will consider this matter closed.”
Andrew Stoltmann, a Chicago-based securities lawyer, said he has handled about 150 Financial Industry Regulatory Authority (FINRA) arbitration claims or lawsuits involving annuity products over the years. He said it is “extraordinarily rare” for a bank or insurance company to rescind an annuity contract.
The Pennsylvania Insurance Department was not able to help Ms. Clark resolve her issue, but about six months after addressing her case, the state took action to protect senior citizens who invest in annuities by passing a law that specifically addresses the topic.
The law, which went into effect in December 2018, requires agents and insurance companies to gather more information to determine if an annuity is suitable. It also requires more disclosure on charges, fees and tax penalties.
To end the annuity contract, Ms. Clark will be required to sign an agreement that surrenders her right to sue New York Life Insurance and Annuity Co. or PNC. After the documents are signed and notarized, she said the bank will transfer the funds to Triboro Federal Credit Union in Homestead where the money will be invested in a traditional stocks and bonds individual retirement account, or IRA, which allows withdrawals.
She said she has no desire to sue anyone. She’s just happy to have the issue resolved.
“From what I read from AARP, there were a lot of seniors who went into annuities and didn’t know anything about it,” she said. “They had more money than I ever did and now their money is tied up to where they can’t even get it. I am just really, really fortunate to be able to get mine.”
With her money back under her control, Ms. Clark said she is able to move forward with plans that she could otherwise not have been able to put into action.
“I will finish up on some projects that I wanted to do,” she said. “I want to do something downstairs with the water in my basement, and other projects here and there like getting my patio finished off with the windows that I wanted to do.
“But mainly just being comfortable and enjoying my family, and being able to just enjoy my little senior life with my money back in my hands and I can do and have whatever for emergencies.”
