For years I worked as a settlement planner helping families craft plans to recover financially from personal injury. I was sometimes discouraged to discover that despite our careful planning, a client had been forced by circumstance to factor an annuity. This discouragement would sometimes turn to angry frustration when I learned that despite my best efforts, some of my own clients had fallen victim to what I view as predatory advertising practices. Due to the heavy expense of their advertisements, these companies offered a low price to the desperate or under-educated seller. Despite my best efforts of planning and warning my clients, some of them factored their payments and those who did received less than they should. I became a bitter opponent of the factoring industry and I felt that the world would be a better place if the entire industry disappeared.
I have found the switch to be extremely rewarding as I have discovered ways to help people whose payment streams no longer match their needs.
One day I came to an uncomfortable realization. I realized that there is a need for a secondary market for future periodic payments. I had seen people’s lives change in such a way that they would actually benefit from liquidating some of their structured settlement payments. Others had felt disempowered at the time of settlement and accepted future payments without the benefit of proper planning. In those instances, I realized that it was almost impossible for them to locate a professional to help them plan and facilitate the transaction while treating them with the respect and honesty they deserve while helping them receive full value. I decided at that time that I could be of the greatest service to personal injury victims as a broker and reformer in the factoring business. Making the move has been uncomfortable for me professionally, given my overall view of the methods and players in the secondary markets. However, I have found the switch to be extremely rewarding as I have discovered ways to help people whose payment streams no longer match their needs.
The question became, “How can the factoring industry change to become a legitimately beneficial resource?” The first step is to make factoring legal and rare. The most important key to reducing the frequency of factored payments is to ensure that claimants get planning resources at the point of settlement. Attorneys and planners are well positioned to discover the client’s situation, capabilities and goals and to help the client choose an appropriately planned settlement. At that time, clients should be warned of the dangers of the secondary market and encouraged to call the settlement planner if they ever consider factoring some of their payments. The settlement planner is then able to advise them and to try to find an alternative. If the planner determines that a real need exists to factor some payments, the planner may direct the client to an honest and suitable professional who will facilitate the transaction
Bentzen Financial, focuses on just such a settlement planner relationship system. Instead of leaving clients in the hands of whichever advertiser gets their attention at the right time, structured settlement brokers can direct them to a professional who can help them choose which payments to sell, guide them through the legal process, and secure the best price for those payments. In this scenario, the client is surrounded by people who were looking after his or her interest from the beginning. The settlement planner monitors the chosen factoring company, creating a system of checks and balances. The client benefits from this system because obtaining referrals is far less expensive than advertising, which can raise the price he or she receives. Also, since the settlement planner screens out those who have not thought through their alternatives or who do not understand the “best-interest” standard, those who are recommended to my company have been prequalified and are unlikely to be rejected by a judge. This advantage further reduces our cost structure and usually allows us to pay much more to the client. As judges grow accustomed to seeing better deals presented for clients who have been pre-screened by professionals who have advised and prepared the client for the process, they will more readily spot and reject the truly awful deals plaguing this industry. This will put a downward pressure on discount rates and result in tighter profit margins which will support less advertising.
I envision the day that the factoring industry will be much smaller, more efficient, and more professional. As my vision becomes reality, the profit margins will be squeezed, making advertising less profitable and therefore, less prevalent. Professionals would weed through the hucksters and the large commercial enterprises who attempt to seduce unsophisticated or desperate claimants with offers of “cash now.” This system puts the power where it belongs – into the hands of settlement planners, attorneys, and judges as they look after the best interest of the consumer, who gets the best deal available.