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INVESTOR ALERT: Financial Advisor And Insurance Agent, Richard Wesselt, Has Fourteen Customer Complaints, Including Numerous Complaints Regarding The Sale Of Life Insurance Policies

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The Wolper Law Firm is currently representing clients of Richard Wesselt, a Financial Advisor and insurance agent, in Collegeville, Pennsylvania. Each of the customers have complained that Richard Wesselt “oversold” insurance products and recommended, as part of an overall investment strategy, that the clients borrow against the cash value of those policies to meet personal expenses and/or finance the insurance premium payments of additional policies. 

The Wolper Law Firm is preparing to file lawsuits and arbitration claims based on this alleged misconduct, seeking compensatory damages and a return of premiums paid. 

Richard Wesselt has been in the securities industry since 1992.  He is currently registered with Fortune Financial Services and was previously registered with Sterne Agee Financial Services and O.N. Equity Sales Co.  Separately, Richard Wesselt is an appointed insurance agent for various insurance companies.  For many years, upon information and belief, he was one of the top producing insurance agents for Ohio National Life Insurance Co. 

Whole life insurance is a form of permanent life insurance that offers a savings component that accumulates in the form of “cash value.”  Over the life of the policy, the accrued cash value of a whole life policy can be withdrawn, borrowed against, or left within the policy to pay future premiums. 

Whole life insurance premiums are more expensive than term-life or variable/universal policies but generally provide a fixed rate of return for the insured.  Most insurance agents recommend that clients leave the accrued cash value in their whole life policies to pay premiums for that policy so that the policy eventually becomes self-sustaining.  In other words, at a pre-defined date, the insured will no longer need to pay monthly or annual premiums as the accrued cash value will be sufficient to cover those payments. 

Borrowing against whole life insurance policies jeopardizes the entire policy and a recommendation to do so may constitute negligence, a breach of fiduciary duty or, in certain circumstances, a misrepresentation.  Because whole life policies are designed to become self-sustaining, if an insured withdraws the accrued cash value, he or she will need to continue paying the above-average premiums in order to maintain the policy.  This creates two problems.  One, the cost of insurance becomes exceedingly high because the insured will need to spend more money out-of-pocket to sustain the policy.  Over time, many insured determine that the cost of whole life insurance is too high and, if there is insufficient cash value to pay premiums, allow the policy to lapse; thus wasting all of the premium paid until that point.  Two, in the event an insured allows a whole life policy to lapse, the loans taken against the policy become taxable.  Many insured are not aware of this consequence. 

Whole life policies are extremely profitable for Financial Advisors who recommend them.  Often times, insurance companies pay the insurance agent 90% of the first-year premium plus a trailing commission of 5% of annual premiums thereafter.  Unfortunately, commissions often become the driving force behind insurance recommendations. 

Clients of Richard Wesselt who have contacted the Wolper Law Firm have all alleged that Richard Wesselt recommended an unsuitable number of whole life insurance policies and encouraged them to borrow against each policy to purchase new policies.  The whole life insurance policies are now encumbered to the point where the cost of insurance has become disproportionate in relation to the economic benefit of having the policies.  

These complaints against Richard Wesselt are not isolated.  According to public records released by the Financial Industry Regulatory Authority (FINRA), Richard Wesselt has been the subject of fourteen customer complaints, alleging sales practice misconduct.  Among the complaints against Richard Wesselt include the following:

  • March 2019—”Unsuitable investment recommendations, investment strategy and misrepresentations and omissions.”  Alleged damages are $350,000 and the matter remains pending.
  • February 2019—”Unsuitable investment recommendations, investment strategy and misrepresentations and omissions.”  Alleged damages are $220,000 and the matter remains pending.
  • January 2019—Customer “alleges Mr. Wesselt engaged in unsuitable sales of insurance an annuities.”  Alleged damages of $750,000 and the matter remains pending. 
  • June 2018—”Customer alleges unsuitable investment recommendations and misrepresentation.”  Alleged damages are $400,000 and the matter remains pending. 
  • October 2018—”Claimant alleges unsuitable investment recommendations, deceptive and unfair trade practices.”  Alleged damages are $300,000 and the matter remains pending.   
  • August 2017—“Customer alleges sale of variable annuity was not suitable.”  The matter was settled for $25,674.
  • March 2017—“Customer alleges rep negligently sold unsuitable products in violation of his fiduciary duty.”  The matter was settled for $15,000.
  • August 2016—“Customer alleges sale of variable annuity and life insurance were unsuitable.”  The matter was settled for $24,257

For a copy of Richard Wesselt’s CRD, click https://brokercheck.finra.org/individual/summary/2195569#disclosuresSection.

Financial advisors have a legal and regulatory obligation to recommend only suitable investments/insurance strategies that are appropriate for their clients’ needs and objectives. Their employing brokerage firm and insurance principal have a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.  

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.

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