Valic Financial Advisors

Kurta Law is investigating recommendations by Valic Financial Advisors’ brokers. Valic Financial Advisors (CRD#: 42803) is a broker-dealer and investment advisory firm headquartered in Houston, Texas.

Valic Financial Advisors has also operated under the following names:

• AIG Retirement Advisors, Inc.
• Valic Investment Services Company
• CoreBridge Financial
• American General Financial Advisors, Inc.

Fees and Conflicts of Interest

Valic Financial Advisors discloses the following conflicts of interest in its Customer Relationship Summary:

• Brokerage accounts charge commissions on each transaction, incentivizing the firm to encourage trading.
• Investors pay ongoing asset-based fees on investment advisory accounts.
• Certain mutual fund share classes and annuities have both front-end sales charges and ongoing fees. Mutual funds also come with separate administrative and internal advisory fees.
• Variable annuities charge administrative fees, surrender fees for selling early, and other fees.
• Valic Financial Advisors earns distribution fees on certain investments based on their size, encouraging the firm to recommend these investments.

Broker-Dealer Services

Investors can choose from the following investment vehicles offered by Valic Financial Advisors. However, investors should know that these products can come with considerable risk and potentially high fees.

• Mutual funds
• Exchange-traded funds (ETFs)
• Closed-end funds
• Fixed-income securities
• 529 Plans
• Variable annuities
• Variable life insurance products

Regulatory Actions

Valic Financial Advisors’ detailed BrokerCheck page discloses its history of regulatory action, including multi-million dollar fines by the SEC.

Six-Figure Fine by FINRA

On January 8, 2021, Valic Financial Advisors consented to the entry of findings that it allegedly failed to establish a system of supervision designed to reasonably review the rates of variable annuity exchanges, to take action in cases of inappropriate exchanges, and to review brokers’ recommendations to invest more money in an existing variable annuity.

According to a Letter of Acceptance, Waiver & Consent (AWC), Valic Financial Advisors allegedly also failed to report statistical and summary information concerning 174 written customer complaints received in 2017 and 2018 to FINRA.

FINRA censured the firm and fined it $350,000. You can read the full AWC here.

$4.5 Million SEC Fine

On July 28, 2020, the Securities and Exchange Commission filed cease-and-desist proceedings against Valic Financial Advisors.

According to the SEC, Valic Financial Advisors allegedly held an agreement with third-party investment advisers to recommend mutual fund portfolio models managed by these advisers. Valic Financial Advisors’ clearing firm allegedly also had a no-transaction-fee (NTF) program with the following terms:

• The clearing firm would pay Valic Financial Advisors a portion of the revenue from certain mutual funds included in the program
• Valic Financial Advisors would receive clients’ 12b-1 fees for their classes in these funds
• Valic Financial Advisors would not pay execution fees for clients purchases/sales of these funds

Valic Financial Advisors allegedly instructed one of these third-party advisers to select NTF mutual funds when adding to a model, allowing the firm to avoid paying execution costs while receiving revenue from the clearing firm

The SEC alleged that, because of these agreements, clients were typically invested in more expensive mutual funds and share classes even though lower-cost options were often available. Further, Valic Financial Advisors allegedly failed to disclose these conflicts of interest to clients and provided misleading disclosures instead.

The SEC censured the firm, fined it $4.5 million, and ordered it to pay disgorgement of $13,232,681 and prejudgment interest of $2,211,072.

$20 Million SEC Fine

On July 28, 2020, the SEC filed cease-and-desist proceedings against Valic Financial Advisers, alleging that the firm failed to disclose to actual and potential teacher clients that its parent company (The Variable Annuity Life Insurance Company, “VALIC”) was compensating a for-profit company owned by certain Florida K-12 teachers’ unions.

The SEC alleged that, between October 2016 and late 2019, the for-profit identified as the “Teachers Union Entity” received cash and other compensation for referring teachers to VALIC and to Valic Financial Advisers’ products and services. These teachers were allegedly not informed of this agreement.

Additionally, the SEC alleged that three VALIC employees were purposefully misidentified as employees of the Teacher’s Union Entity at retirement planning seminars and benefit events where they referred K-12 teachers to VFA.

The SEC censured Valic Financial Advisers and fined it $20 million.

How Can Investors Recover Lost Funds from a Brokerage Firm?

FINRA-registered brokerage firms typically require that investors go through FINRA arbitration, rather than civil court, to resolve their disputes. FINRA arbitration is designed to be a quicker alternative to a traditional lawsuit, and can help you recover your losses.

Kurta Law Can Help

Investors who lost money working with a Valic Financial Advisors broker or advisor should reach out to an investment fraud lawyer for help. Our attorneys offer free case evaluations and do not charge a fee unless we win your case. Call (877) 600-0098 or email info@kurtalawfirm.com.