Litigation

One of my pet projects is helping to improve the financial literacy in my part of the world. One of my pet peeves is when "the teachers" sling financial jargon in a sales approach or advertising that on its face contributes or has the potential to contribute to "the illiterati".

For example here's what "over 21 years experience in banking, finance and structured settlements" gets you..."We ensure sound fiscal management of funds by leveraging life insurance companies with A+, AM Best rating, or better". So states the advertising claim of Structured Settlement Brokerage firm Pressman Settlements Corporation on how their services benefit attorneys and their clients.

According to Wikipedia, the term fiscal refers to government debt, expenditures and revenues, or to finance (particularly financial revenue) in general.  On fiscal policy Investopedia states "Government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates and government spending, in an effort to control the economy". For the state of Illinois "Fiscal Management provides budgeting and accounting suport to the Office of State Fire Marshall"

As used in finance, Wikipedia defines leverage is using given resources in such a way that the potential positive or negative outcome is magnified. It generally refers to using borrowed funds, or debt, so as to attempt to increase the returns to equity. In my opinion the use of leverage by Pressman Settlements Corporation is misplaced. See the more appropriate word "diversification" below.

The word ensure means "to make sure or certain of something". If Pressman Settlements is implying that she or it can ensure sound fiscal management of funds by leverage then one better check her or its Errors and Omissions policy. I doubt there is enough in the aggregate to cover the chance thats she or it is wrong on that claim.

Comments:

Diversification in finance is a risk management technique, related to hedging, that mixes a wide variety of investments within a portfolio. Because the fluctuations of a single security have less impact on a diverse portfolio, diversification minimizes the risk from any one investment.

A structured settlement provides a stable source of income tax free payments to tort victims on its own, or integrated as part of a settlement plan. The size of the payment sets an incremental limit on spending, but it does not set a "spending policy" or budgeting or control the economy.

Diversification of annuity issuers part of a settlement plan can be a prudent strategy but it cannot absolutely ensure anything. While annuity issuer life insurers are generally conservative, a structured settlement brokerage firm has no control over the performance of investments or investment management of any structured settlement annuity issuer. Diversification can provide greater comfort in that it may minimize the risk of default from any one annuity issuer.