Ok, in the annals of political defeats this doesn’t exactly rank with Lincoln losing to Douglas for the Illinois senate, only to come back and become the 16th president of the United States a few years later. However, considering the current state of our profession, the tumultuous last 36 months in our association and the looming storm clouds of tax reform and Executive Life of NY, I did hold out some hope that our profession might want to make some material changes in our priorities and spending.
I knew as I walked up for my talk that my thoughts on factoring, expanding membership, greater board accountability and allocation of our lobbying efforts was going to have a lot of natural opponents. That said, I felt as if enough of our members understand we can’t be nibbling around the edges any more, but that we need to take some bold, positive steps to build our allies, expand the use of our core product, align us politically with the financially vulnerable in our society and amend the voting and board process to reform our voting, reporting and transparency.
As anyone who knows me well is painfully aware, I am exceptionally persistent when I feel I'm right and I will not simply fade away at this crucial time in our profession.
Fortunately/unfortunately for those among us who want to run out the clock with the status quo, I happen to lead a powerful news, marketing and educational platform which gives me exceptional reach. Rather than shrink from these issue to garner approval, I am only going to speak out more on the core challenges we face as we are about to plunge into the next battle for the reputation and survival of our core product, the tax free structured settlement annuity.
So, every day this week I am going to post on the five key issues I made part of my campaign for NSSTA and outline why I feel if they aren’t addressed in the coming months that our profession and our association will be facing even greater problems then we are staring at right now.
Todays topic: Factoring has become a minor irritation, but still absorbs huge dollars and time from our association and legal counsel.
Nothing against the other candidates that did win election, but the constant refrain of attacking factoring companies at the expense of constructive ideas to build our business is really just more of the same. Sure, we all would prefer that all of our clients would have adequate cash, financial discipline, family stability and access to sophisticated planners AFTER they settle their case using a structured settlement. The facts are that they don’t and that factoring is legal and regulated in 47 states, and if we have been at war with the factoring profession, it’s about time our membership and leadership got the word that WE LOST AND THE WAR IS OVER, at least as regards legality and process.
Our association is like the poor Japanese soldiers left on tiny islands in the Pacific, isolated with out radio contact, only to be found years later, still fighting the war, not having gotten the word that the war is over. Person after person gets up and says “ Down with factoring” so they can get the easy applause, not knowing that the VAST majority of people in America think JG Wentworth is “structured settlements” not NSSTA or it’s members. The facts are simple and I feel with out dispute:
1. The process of factoring is covered by model legislation in 47 states.
2. Factoring companies, funded by hedge funds, are going to bury us in advertising, lobbying funds, internet marketing, etc, because they are consumer directed where our profession is geared toward niche marketing. We will never outspend them or out shout them as their sales model relies on mass marketing and aggressive consumer solicitation.
3. The one issue we can control, professional standards on marketing, advertising and client communication we have abdicated to unlicensed con-men at the worst firms, instead of developing a means where by annuitants and settlement beneficiaries can come to NSSTA members for help. Our leadership for decades has punished annuitants who were in desperate circumstances, instead of assisting them with their financial hardship. The result is they by default are steered into the hands of transactional, shrouded, unqualified individuals who “give them their money now!”
If we as a profession seriously want to control the factoring abuses and remove 99% of the serious problems related to the process, we could take three very simple steps to enforce professionalism in the factoring industry and the cost to us would be minimal.
1. Establish a NSSTA provisional membership and endorsement for factoring firms that meet a strict set of criteria in the area of marketing, advertising, pricing transparency and client financial planning. Can you imagine how desirable it would be for a factoring company to have the “Good Housekeeping Seal” of NSSTA? In the words of Michael Corelone, “ Keep your friends close but your enemies closer.” Instead we draw up the moat, moan about factoring, spend huge sums trying to “control” them when the responsible firms would fall over themselves to be part of NSSTA and meet the ethical and marketing standards we establish for membership.
2. Establish a NSSTA approved liquidity process and program, led by NSSTA members who meet with and counsel those looking to cash out their annuity. What these people need is quality financial planning and assistance, not to be given the back of our hand and sent to the nearest factoring firm to solve their issues. Yes, thats right, NSSTA members helping people decide if, when and how to factor and then working with them to find the best solution and being paid for their services in an open and transparent fashion. Who is better qualified to discuss the planning, liquidity and cash needs of personal injury victims then NSSTA members, but again we abdicate this to the factoring firms and then cry about the results.
3. Put our lawyers and lobbyists to work on creating liquidity solutions in our product line instead of playing an hideously expensive game of “whack a mole” with the factoring companies and fighting a war that is already lost. We have a lot of quality legal talent in our association and profession. Lets put it to use creating a degree of liquidity in the product in a tax compliant, responsible fashion and watch how fast the worst abuses of factoring vanish.
The “factoring war” can still be won, but it is going to take a radical change in attitude, approach and thinking. NSSTA has only to embrace the fact that a percentage of people WILL look to liquidate their structures every year, but if we make NSSTA members the first stop for responsible planning, we take back control of the process in a way we will never achieve by endless lobbying, complaining and legal maneuvers.
Until we make these simple but important changes in strategy, keep cheering those cheap applause lines against factoring and paying our industry lawyer sto manage the legal equivalent of the Maginot Line and see if we aren’t in exactly the same situation a year from now.
Tomorrow: Expanding the tax treatment of sections 104 and 130 to molestation, abuse, wrongful imprisonment and civil rights cases.