← Broker database 2026-04-02
Ameriprise Financial Services Fined $450,000 Over Variable Annuity Exchange Supervision Failures
According to FINRA, Ameriprise Financial Services, LLC was censured, fined $450,000, and ordered to pay $993,950.47 in restitution following an April 2, 2026 AWC.
The firm failed to establish and maintain a supervisory system—including WSPs—reasonably designed to oversee recommendations involving variable annuity exchanges with guaranteed lifetime withdrawal benefit (GLWB) riders. Specifically, the firm failed to provide its registered principals with sufficient guidance on how to evaluate whether customers would actually benefit from a GLWB rider's growth credit feature before commencing withdrawals. This distinction is critical: the growth credit feature is most valuable when a customer delays withdrawals and allows the benefit base to grow over time.
These exchanges affected 114 customers who were already eligible to begin withdrawals from their existing annuity and either planned to—or actually did—begin collecting income from the new annuity shortly after the exchange. For these customers, the growth credit's potential value was minimal, yet the higher fees associated with the rider would apply for the life of the new contract. The average incremental cost per customer was $8,718.86—fees paid for a benefit they were unlikely to realize.
GLWB riders are often marketed as protection against outliving one's retirement savings, and they can be genuinely valuable in the right circumstances. However, they carry ongoing fees that reduce investment returns. For customers who plan to begin drawing income immediately after purchase, the rider's growth-oriented features offer little practical benefit. Firms must ensure their representatives understand these product-specific nuances and evaluate each customer's actual situation before recommending an exchange.
FINRA's restitution order means that the 114 affected customers are entitled to recover the incremental costs imposed by these unsuitable exchanges.
Investors should be cautious when a broker recommends exchanging an existing annuity for a new one, especially if you plan to begin drawing income soon. Ask your broker to provide a written analysis showing how the new product benefits you specifically given your timeline, income needs, and existing contract terms. Understanding the true cost of an annuity exchange before signing is essential to protecting your retirement savings.