Investors Allegedly Misled by Douglas Farris
Douglas Farris, a broker registered with NYLife Securities, is facing allegations of misleading investors regarding a variable universal life insurance policy. According to his BrokerCheck record, accessed in May of 2024, this is the fourth investor dispute on his record in what has become a troubling pattern for investors associated with him.
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The Allegations Against Doug Farris: Inadequate Education on Complex Products
On February 7, 2024, investors alleged that Douglas Farris misled them and provided inadequate education regarding a variable universal life insurance policy. The investors sought reimbursement of all premiums paid since the policy’s inception, amounting to $190,400. The dispute ultimately settled for $157,912.54, which is a considerable recovery for the investors.
Understanding Variable Universal Life Insurance
Variable Universal Life insurance (VUL) policies are complex financial products that combine a tax-free death benefit for beneficiaries with the investment of investors’ premiums. However, the value of a VUL policy is not guaranteed to increase over time, as it depends on the performance of the underlying investments. Additionally, if a VUL policy lapses, investors lose the associated tax benefits.
How VUL Policies Work
VUL policies, like Douglas Farris’s referenced above, are a type of permanent life insurance, meaning they provide coverage for the entire life of the policyholder as long as premiums are paid. The premiums paid by the policyholder are divided into two parts: a portion goes towards the cost of insurance and fees, while the remaining amount is invested in subaccounts offered by the insurance company.
These subaccounts are similar to mutual funds, investing in various asset classes such as stocks, bonds, and money market instruments. The value of the policy’s cash value account fluctuates based on the performance of the underlying investments, which can result in gains or losses.
If you’d like an in-depth breakdown to watch here is a video of VUL policies explained by our firm’s founder, David Meyer.
Advantages of VUL Policies
- Tax-deferred growth: The cash value component of a VUL policy grows tax-deferred, allowing for potentially higher returns over time.
- Flexible premiums: Policyholders can adjust their premium payments within certain limits, allowing for greater financial flexibility.
- Access to cash value: Policyholders can access the cash value of their policy through loans or withdrawals, subject to certain conditions and potential tax implications.
Risks and Considerations not Shared by Douglas Farris
- Investment risk: The cash value of a VUL policy is directly tied to the performance of the underlying investments, which can fluctuate and potentially result in losses.
- Fees and expenses: VUL policies typically have higher fees and expenses compared to other types of life insurance, which can erode the policy’s cash value over time.
- Lapse risk: If the cash value of the policy is insufficient to cover the cost of insurance and fees, the policy may lapse, resulting in the loss of coverage and any associated tax benefits.
It’s essential to carefully evaluate your financial goals, risk tolerance, and overall financial situation before investing in a VUL policy. Consulting with a qualified financial advisor can help you determine if a VUL policy is the right choice for your specific needs.
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Fiduciary Duty: Accountability in Financial Advice
At Meyer Wilson, we believe that financial advisors have a fiduciary duty to act in the best interests of their clients just as Douglas Farris did in this dispute. Providing inadequate education or misleading information about complex financial products is a breach of this trust. Investors deserve transparency and accountability from those entrusted with their hard-earned savings.
Call In Backup: Meyer Wilson Stands Ready
If you have worked with Douglas Farris or any other financial advisor and have concerns about your investments, do not hesitate to contact Meyer Wilson at 866-938-2021 or visit investorclaims.com for a free consultation. Our team of experienced professionals is dedicated to advocating for investors and helping them recover any losses resulting from misconduct.
Remember, we work on a contingency fee basis, which means you pay no fees unless we successfully recover your losses. Do not let securities fraud go unchecked. Take the first step towards reclaiming your financial future today.
Written By: Courtney Werning
Recovering Losses Caused by Investment Misconduct.