Annuity Commission
- Thread starter Door2Door
- Start date
No.
- 10,696
The more you get paid, the less the client gets paid. Only so many pennies in a dollar.
Any annuity paying 10% comp is going to be a horrible product.
Do the best thing for the client, your income will work itself out just fine. If comp is your main focus, you are going to screw over a lot of peoples retirement.
Any annuity paying 10% comp is going to be a horrible product.
Do the best thing for the client, your income will work itself out just fine. If comp is your main focus, you are going to screw over a lot of peoples retirement.
kpbdy99
Super Genius
- 160
If I stumbled across an annuity paying 10% commissions, I'd run like hell. Somebody's getting the short end of that deal.
jasperjohns
Super Genius
- 198
If you write a product and choose the trail comp option you may over time earn 10%. This can be done with several competitive products....But upfront is difficult.
- 4,882
Ironic that the carriers that did have those type of comm at one time were the ones with class action lawsuits & the focus of States AGs.
Some of these replies need to reiterate that your commissions don't from their investment, or returns. This shouldn't be mistaken.
Yes I agree never sell a product based off the comp rate.
Again your clients should know that your commissions do not come from their investments.
The higher the comp usually matches the complexity of the product when it comes to annuities. Longer Surrender period usually higher commissions, etc.
10% is a ridiculous high commission for annuities and agreed it would be an terrible product to sell.
Do what's best for your client. Explain surrender periods honestly, if you sell products that have them, and disclose truthfully that you are compensated for these products from the company, not your clients investment.
Yes I agree never sell a product based off the comp rate.
Again your clients should know that your commissions do not come from their investments.
The higher the comp usually matches the complexity of the product when it comes to annuities. Longer Surrender period usually higher commissions, etc.
10% is a ridiculous high commission for annuities and agreed it would be an terrible product to sell.
Do what's best for your client. Explain surrender periods honestly, if you sell products that have them, and disclose truthfully that you are compensated for these products from the company, not your clients investment.
- 10,696
Sorry man, thats a great sales pitch to consumers. Doesnt fly with experienced agents. Hopefully you just dont know any better.
----
Of course the comp is not directly deducted from their account value.
This is a discussion among agents... if that needs to be said to an agent, well... they shouldnt be selling annuities in the first place.
----
Carriers pay comp based on how much they plan to make off a product over the course of the Surrender Period.
The more the carrier plans to make, the more comp they pay the agent. Which leaves 1 of the 3 parties involved holding the short end of the stick.
Comp is most certainly tied to performance potential of a product. Its all coming from the same bucket of money, carrier/agent/client.
---
Example: if a carrier expects a cumulative gain of 50% over 10 years, and pays the agent 5%, and themselves 5%, that leaves 40% left for the client (4% per year).
Up the comp numbers to 8% each, suddenly the client is left with 34%, or 3.4% per year.
Add to one, take away from the others.... only 100cents in every dollar.
Now that example is ignoring index gains. The client hypothetically could get more than the average that particular product experiences historically. But its an average because most people will get around that.
And if the comp is lower on a FIA, that leaves more money left in the bucket for the carrier to purchase option contracts for the index accounts... which leads to higher Caps for the client.
----
To give you a different perspective, lets use Group Health, or auto, or even LTCI as an example.
Comp from those is paid directly from the carrier.
But I can lower my comp on those products and give the client a discount on premiums..... which directly proves that comp dictates pricing factors of any insurance policy, including annuities.
Last edited:
Thank you for your input sweetheart, just was trying to clarify for the agent NEW to annuity sales that point. Because your initial reply did not clarify that, which its not your fault but I've seen too many of these forms confuse new agents and they end up making major mistakes getting information from "experienced" agents. But then again you are not wrong completely, and I am not arguing the way carriers decide commissions for certain products. But you can not seriously generalize each carries commission breakdown as the same. There are so many factors that dictate commissions to agents, and yes product profitability is one aspect but not the sole aspect. Each carriers risk management, and portfolio management teams are different. Their options, and indexes all come into affect. To say its the same all across the board is wrong 100%. At the end of the day these new agents really need to understand their comp rates from their upline, and need to be educated on the different products commission pays. Sad part is most uplines are failing these new agents and replies like yours does as well.
You are getting into the weeds and you should really take a step back and answer these forms to incoming agents, like the initial question that started this form. These discussions are not just between experienced agents. Trust me, its beneficial to repeat "common sense" practices. Because it helps new agents.
These forms should be helpful to all. New agents, and experienced ones as well. Even consumers read these forms. So honestly just think a little more about whose reading your replies and know that your information you think is factual, really isn't. Your generalization of all carriers "buckets" is wrong, consumers investments are not implemented the same, nor is the payouts to agents.
Is it "wrong" or just not the in depth explanation that you would give? It is not wrong, it's just a much simpler way of explaining. Pretty much all companies "buckets" are made up of the same thing. The amounts that go into those buckets are the difference.
If you don't think these companies work the numbers backwards so that they start from a place of profit, you are mistaken. It's all about how much the company thinks they can profit from a particular product. That's the only reason they are in business....to make a profit.
Commissions ARE tied directly to the investment amount. That is how the amount of commission to the agent is calculated. Simple as that. Why complicate things?
