Typicall Comissions ?

Annuity commissions are paid from the insurance company's general account. Those funds are replenished by the results of the sold annuity. If the annuity is surrendered before anticipated earnings are recovered, the surrender charge applies.

How about this explanation from John Olsen - who has literally written the book on taxation and annuity sales:
ProducersWeb - Annuities - Deferred annuity surrender charges are owner benefits
 
KRobby said:
Seem above. Hopefully you learned something today. Forming a sentence will be next week.
Click to expand...

The days of high commission annuities are going to be over. That is not really a bad thing if you can get trails and your in other markets for current income.
 
Last edited:
KRobby said:
Seem above. Hopefully you learned something today. Forming a sentence will be next week.
Click to expand...

Don't get lost in semantics.

Commissions are paid from the general account, but where do you think the general account came from? Premiums (life, annuity, DI, LTCi, etc.), charges to separate accounts and investment income from those premiums.

Charges to a separate account or investment portfolio are more transparent. However, that doesn't make them better. 1-2% a year adds up very quickly and may or may not be more than the commissions paid on annuity. Also, with separate accounts or investments, the only guarantee you won't lose it due to bankruptcy of the holder. With a fixed annuity, the principal is guaranteed as well as any interest once credited to the annuity, subject to any surrender charge for early withdrawal.
 
Maybe its semantics, maybe not. Annuity comp is a "soft cost" to the client. Securities comp is a "hard cost" to the client.

Put $100k into a traditional actively managed A Share Mutual Fund and your account will start out with around $95k-$96k working for you day one.

Put $100k into an Indexed Annuity and you have $100k working for you day one.

Everything else being equal, that is a very big difference for the consumer.
Obviously in this world, everything else is never equal. But a hard cost vs. a soft cost is a very big difference in how a persons money is impacted.

How the sausage gets made is not that important... how it affects your taste buds is what matters.
 
scagnt83 said:
Maybe its semantics, maybe not. Annuity comp is a "soft cost" to the client. Securities comp is a "hard cost" to the client.

Put $100k into a traditional actively managed A Share Mutual Fund and your account will start out with around $95k-$96k working for you day one.

Put $100k into an Indexed Annuity and you have $100k working for you day one.

Everything else being equal, that is a very big difference for the consumer.
Obviously in this world, everything else is never equal. But a hard cost vs. a soft cost is a very big difference to someones money.

How the sausage gets made is not that important... how it affects your taste buds is what matters.
Click to expand...

You are quite right. And I hope you realize I was not advocating one over the other. My statement is, ultimately the money comes from the client. Either via a direct fee or lower interest than is ultimately possible.

My personal belief is that wrap accounts were invented so B/Ds could annuitize their revenue streams versus irregular or infrequent transactions.

Ultimately any comparison between a fixed annuity and an investment account is unfair. The compensation to the agent/stockbroker is different and they perform differently. Also one has guarantees that the other never will.
 
scagnt83 said:
Put $100k into a traditional actively managed A Share Mutual Fund and your account will start out with around $95k-$96k working for you day one.

Put $100k into an Indexed Annuity and you have $100k working for you day one.
Click to expand...

Can you elaborate a little on the difference please?
 
You must log in or register to reply here.

Latest posts

Back
Top