You do $500,000 annuity sales....I want to go prospecting with you.
When was the last time you sold a $500,000 annuity? How many people do you personally know that sold a $500,000 annuity. How many $500,000 sales are made each year.
Mutual Fund commissions were at one time higher and so were general securities commissions. So guess why churning is such a big problem in the Registered Reps barn? That sales manager wants his quarterly sales figures to go up dag nab-it.
I must be a weird duck because if I am:
A. Buying something I want
B. Can afford to pay the price
C. If it satisfies a need
I don't care if the person makes 5% or 10%.
Originally Posted by healthagent
The real issue at heart is annuity commissions are simply too high.
Nothing is as it is - it is only as it appears to be. And when commission are un-Godly high there will always be complaints that the sale was commission driven.
Lower the commissions. There's not a reason in the world some carriers should be offering 10% - land a $500,000 annuity and the agent walks with $50,000 commission.
That's complete insanity.
Instead, the carriers could lower the commission and put the additional money to make their products even more attractive.
No but I can show you a P&C agent making $50,000 on a sale. Small shops pay $20,000 a year in BAP, GL, umbrella policies and that is a $2,000 commission. I knew an agent that that the insurance for an entire municipality. In 1987 he was making $25,000 a year on it. That would be nice but no thanks. Each year at renewal, I kid you not, he had two stacks of policy forms on his desk and pile was over two feet. He had to go through the entire pile, make sure every car, piece of equipment was on the policy, correctly itemed and if he made a mistake .....well that would be a nightmare.
Fifteen years ago I had a client that paid a minimum GL premium of $250 a year. That was a $25 commission to me. He rented space in a building and one night the entire building burned to the ground. The fire damaged trains setting on the sidetrack. Long story but seven years later the court determined the fire was an accidental fire started by my client. For that $25 I spent a lot, lot, lot, lot of time over seven years of insurance company fights.
I know my group health has ratcheting mechanisms where once a certain premium on the group is reached the commission starts to drop. I've never looked but does the FIA sale have the same ratcheting? I'm fairly certain that the commissions drop after a certain age.
I can say that emotionally, a $50,000 commission on one annuity sale does make me pause.
Originally Posted by healthagent
sorry...but show me how an agent selling an auto policy can pocket $50,000 on a single sale.
On the stand or at a hearing before the DOI I can argue that I would have made roughly the same commission regardless of which health product I sold. Maybe a slight difference.
That is not the case here - where an annuity agent on the stand or before the DOI would have to admit that recommending securities product would have resulted in a fraction of the commission.
It just LOOKS bad - it is NOT bad - it's what it appears. Here's the perception:
"Annuity agents, commission hungry and most not licensed to sell financial products "screw" seniors for commission."
Is that reality. Heck no! But the commissions generated compared to selling funds or CDs are huge.
Again, the bad argument the financial industry is making is:
"...insurance agents running around, most whom are not securities licensed, not recommending the correct product due to high commissions."
Perception does not equal reality. It's easy to get people riled up when they see annuity agents walking away with countless thousands while seniors cry foul.
sorry...but show me how an agent selling an auto policy can pocket $50,000 on a single sale.
Metaphors...
Who are you to decide how much someone makes? Insurance companies price products so they will get sold. I know no one personally that has sold a $500,000 annuity. I do know people out there do. They work hard. I have no idea if they work hard enough to earn $50,000 on a sale but how much someone makes and how hard they work is of no business to me.
And if someone sells a $500,000 annuity improperly it doesn't matter if that person makes $50,000 or $1000 or however much YOU think they should make, they should face the music. I checked my state insurance departments website and I do not see any criminal charges in regards FIAs. I do see a few about health insurance programs however.
I'm certainly not smart enough to decide how much commission is the right amount of commission on every product. That's what insurance companies employ actuaries for. I am not smart enough to be an actuary.
FIAs fill a valid role in the financial marketplace. I don't know how many billions of dollars of these products have been sold this year but it is a huge number. If they were bad products people wouldn't buy them and insurance departments wouldn't let them be sold.
I have not seen class action attorneys advertise to start lawsuits against insurance agents because they put clients money in a certain FIA but I do see them advertise for clients that have put money in the stock and bond markets.
You go before a courts and just because you are an insurance agent you are already DOA.
In general insurance agents are not very high on the list of admirable vocations.
You go before a court, for a child's cancer claim, a claim that ran out of outpatient money for their chemo treatments and the jury will hang you. They could care less if you made $600 or $6,000 on that case.
I think I have a company that limits outpatient treatments (or something to that effect) but I won't sell it.
Originally Posted by healthagent
Still a bad analogy and here's why:
On the stand or at a hearing before the DOI I can argue that I would have made roughly the same commission regardless of which health product I sold. Maybe a slight difference.
That is not the case here - where an annuity agent on the stand or before the DOI would have to admit that recommending securities product would have resulted in a fraction of the commission.
It just LOOKS bad - it is NOT bad - it's what it appears. Here's the perception:
"Annuity agents, commission hungry and most not licensed to sell financial products "screw" seniors for commission."
Is that reality. Heck no! But the commissions generated compared to selling funds or CDs are huge.
Again, the bad argument the financial industry is making is:
"...insurance agents running around, most whom are not securities licensed, not recommending the correct product due to high commissions."
Perception does not equal reality. It's easy to get people riled up when they see annuity agents walking away with countless thousands while seniors cry foul.
Well if you don't get it then you'll never get it. It's the appearance that high commissions are influencing agents. If you don't understand that then nothing I post will change it.
I don't understand your post? Do you mean I won't get one or agents in general. For me I had an S7.
Originally Posted by healthagent
Well if you don't get it then you'll never get it. It's the appearance that high commissions are influencing agents. If you don't understand that then nothing I post will change it.
Why I think FINRA is behind it; & NAFA is opposedGo to Top
State insurance regulators are angry about EIA proposal Iowa commissioner Voss is set to meet with SEC Chairman Cox tomorrow By Sara Hansard July 14, 2008
State insurance regulators are displeased with the Securities and Exchange Commission and state securities regulators about a proposal that would regulate equity index annuities as securities rather than as insurance products, and one state insurance regulator is meeting with SEC Chairman Christopher Cox this week to address those grievances.
"I've very disturbed by it," said Susan Voss, who as insurance commissioner in Iowa has jurisdiction over state securities regulation. ... "I'm curious as to why all of a sudden [the issue has] risen to this level when clearly, they're regulated by state insurance commissioners," Ms. Voss said.
...
Bringing annuities under securities regulation has been suggested by both state securities regulators as well as by the Financial Industry Regulatory Authority Inc. of New York and Washington. But when the SEC last addressed the issue, in a 1997 concept release, the agency ruled that they were insurance products.
Well, no, they didn't. They quietly closed the file without comment.
...
"To move the annuities and put them under securities will take away some of the other protections that are currently under insurance regulation," said Tom Hampton, commissioner of the District of Columbia Department of Insurance....
That's a nice soundbite, but variable annuities don't seem to lack regulation.
Finra, which has issued guidance to broker-dealers that equity index annuities should be supervised like any other security, has concerns about how the products are sold, said Herb Perone, spokesman for the regulator. "But only the SEC has the prerogative to change the jurisdiction."
One concern of the insurance regulators is that the industry is doing little to fight off the SEC. "Where is the industry, and why have they not weighed in on this?" Ms. Voss asked.
That may be because the life insurance industry is divided be-tween the larger variable annuity industry and the much smaller equity index annuity industry, though some firms issue both products. ...
I know no one personally that has sold a $500,000 annuity.
Hmm, I do. Actually, I know several. Keep in mind, the commission is 8%, not 10%, but the annuities are still sold.
Is that a bad thing? No. In the cases I'm aware of the details, the agents could have sold funds instead of annuities, but due to other needs annuities were a better placement. You'll never get everyone to agree that annuities are a better option, but when choices are available and presented to the clients, then it really is the clients choice.
On the HSA example I agree because you added the caveat of choosing the wrong product.
You aren't comparing equal sides if the $50,000 commission isn't the wrong product.
I have a very wealthy relative. We don't do business together and I am fine with it because he is rather anal. He is 77 years old and in good health. He could take $500,000, place it in a 10% bonus FIA, with a 10 year surrender and not blink an eye. He could make me beneficiary.
In today's current economic climate could he make a safe, guaranteed $50,000 in the first year? He could maybe buy some Zero Coups, hope for the best because their prices fluctuate a lot; maybe find some Muni's, a Fund but could they guarantee him 10%? It is possible but he would probably assume more risk. Plus if he died there is that probate thing with securities and me as beneficiary would find it nice to get the $$$ right away. Me as beneficiary is just a hypothetical.
The above person just lost $450,000 in a closed end mutual fund that was a mortgage fund. The Fund Manager said, "We hope to have your principal back in 2 years but you definitely will not get any income from the fund." I like the word the manager used..."hope".
So, if relative would have bought an FIA, without the risk to principal, an agent someplace would have made $50,000 commission, would my relative have been hurt?
Is the same argument going on over in mutual fund land over which is better, the A,B,C share prices? I would wager most people don't know if their mutual fund has a 12b1 charge or even their funds expense ratio. I'd like to see Dateline do a story where they interview mutual fund owners and ask, "does your fund have high or low expense charges, does it have a 12b1? Things like that and I bet a lot of people wouldn't know.
Suitability is an interesting animal. Is there many - if any things that will satisfy at all times, in all future changing situations or future expectations? I've never approached a 77 year old about buying an FIA and don't know if my example makes the cut. I'd have to think about it but on the surface it makes sense. Someone on the list may have more valid reasons for a 77 year old to own an FIA, maybe yes ..maybe no. At least he wouldn't be out $450,000. If it were me...I would cry, To him, it was his play around, fun money income.
I know my wealth transfer tome mentions the use of annuities.
All that I can say is, if you are ever sued ...get very good representation. The plaintiff's attorney is most likely well skilled enough to make a Mother Teresa look like scum.
Originally Posted by healthagent
Agreed. However, let's say a HSA was a better choice for my client than a PPO plan.
Now let's say I made a $10,000 commission off the HSA and only $500 off the PPO.
Take it to the next step. My client goes to use the HSA and bitches when he starts getting bills - claims I never really went over how an HSA works.
So he files a complaint and it's exposed that I made $9,500 more. Now the general public doesn't understand and I look like a commission whore.
Well there's going to have to be some type of answer as all the baby boomers head into retirement and everyone is living longer and longer.
My father's generation was told to have 15 years of retirement savings after retirement.
That's not gonna cut it and with my father at age 76 now he's worried. He's in perfect health and now thinking "**** - if I live into my late 80's or 90's I'm in trouble."
Remember, when my father was growing up you were supposed to drop dead on your 75th birthday.
Well there's going to have to be some type of answer as all the baby boomers head into retirement and everyone is living longer and longer.
My father's generation was told to have 15 years of retirement savings after retirement.
That's not gonna cut it and with my father at age 76 now he's worried. He's in perfect health and now thinking "**** - if I live into my late 80's or 90's I'm in trouble."
Remember, when my father was growing up you were supposed to drop dead on your 75th birthday.
I honestly think that the answer for the majority of the baby boomers is to never retire or delay retirement until a much later date than the 55-65 age we have considered to be appropriate. That is if they are in good health. Now maybe they take a less demanding job or go to only part time status. If they do that it eliminates a lot of the problem of depleting savings and depending upon upon a perhaps tottering social security. I know two guys one who is about 66 a CPA and the other is 71 and was chief financial officer for a small manufacturing plant. They both work as parts delivery drivers for O'Reilly Auto Parts. It is work that is not physically or mentally demanding. It gets them out of the house, keeps them in contact with other people, and supplements retirement income.
According to recent survey results I have seen the majority of baby boomers are unprepared and make unrealistic assumptions. For example the majority believe they will be able to take a 10% withdrawal rate in retirement while most experts believe that 3-5% is the realistic.
When I sold cars we used "DX drivers" - people needed to bring requested cars to dealerships. A Toyota dealership might not have that particular car, but another dealership does - so they swap.
The dealerships love hiring retired people since they are dependable and unlikely to abuse the cars.
Pays well too. If you know anyone bored, retired and in need of some spare cash, tell them to hit a few dealerships and ask if they need DX drivers.
$500 off a simple health insurance plan? Whoever pays that is really screwing the customer. If the commission was only $75.00 think of how much of a better program it could be for the insured.
Most men that I knew who retire and stopped working did not last long. They died rather quickly. Total retirement is deadly to men and perhaps the reason there are a lot of widows roaming the hills.
Originally Posted by xrac
I honestly think that the answer for the majority of the baby boomers is to never retire or delay retirement until a much later date than the 55-65 age we have considered to be appropriate. That is if they are in good health. Now maybe they take a less demanding job or go to only part time status. If they do that it eliminates a lot of the problem of depleting savings and depending upon upon a perhaps tottering social security. I know two guys one who is about 66 a CPA and the other is 71 and was chief financial officer for a small manufacturing plant. They both work as parts delivery drivers for O'Reilly Auto Parts. It is work that is not physically or mentally demanding. It gets them out of the house, keeps them in contact with other people, and supplements retirement income.
According to recent survey results I have seen the majority of baby boomers are unprepared and make unrealistic assumptions. For example the majority believe they will be able to take a 10% withdrawal rate in retirement while most experts believe that 3-5% is the realistic.
Could also knock off the 5% renewal. Even better, sell it without agents. Oh but wait that idea is already taken by the Feds upcoming plans.
Originally Posted by bobson
$500 off a simple health insurance plan? Whoever pays that is really screwing the customer. If the commission was only $75.00 think of how much of a better program it could be for the insured.
Re: Why I think FINRA is behind it
Well, no, they didn't. They quietly closed the file without comment. 
To him, it was his play around, fun money income.
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