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Brokers Take Rollovers for a Ride

People shifting their savings can end up in dodgy investments
Brokers Take Rollovers for a Ride
Illustration by 731

Kathleen Tarr says AT&T employees looked to her as “their de facto 401(k) expert.” Visiting their homes and offices, she advised them on their retirement plans as they called up balances on computer screens. Tarr worked for Royal Alliance Associates, a network of independent brokers owned by American International Group. She encouraged hundreds of departing AT&T employees to roll over their retirement money into real estate investment trusts (REITs) that don’t trade publicly and variable annuities—both of which are high-commission investments.

Tarr and her business partner, Richard McCollam, reaped hundreds of thousands of dollars a year in commissions. Not all of Tarr’s clients fared as well, and 37 have filed complaints against her, according to regulatory records. Seven are suing Royal Alliance. Tarr, McCollam, and Royal Alliance say they always suggested appropriate investments. “I am forever besmirched, and that is really hard for me,” Tarr says. “I am a minister’s daughter and granddaughter. If anyone thinks I would do anything illegal, immoral, or unethical, that hurts me where I live.”