Ohio National to end Variable Annuity brokerage arrangements

Oct 2, 2018

  1. PA Bill
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    Well, these annuikty outfits have been ripping the public off for years. Only a matter of t
    Well, these annuity outfits have been ripping the public off for years. No surprise they are now setting their sights on the agents. I mean, who gives a rat's ass about agents?:sad:
     
    PA Bill, Oct 19, 2018
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  2. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    ON was weird with their 401k product. At one time it was like that. Then they changed the internal rules to say you didnt have to be an "active" RR... but you had to at one time have been a RR of some type, or the equivalent designation. Meaning at one time you had to have had a series 6 or 7 or 65.

    Then, as you mentioned, it was only RRs during the fiduciary debate.

    But recently, I was told they have brought it back and are allowing non-registered agents to sell it where state laws allow. It was someone with a different carrier who told me this, so it might not be correct. Just hearsay. I never liked the progressive fee structure the product had. Not very fair to the client, better options out there imo. But their solo plan was nice despite the progressive asset fee.
     
    Last edited: Oct 19, 2018
  3. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    You dont understand the situation. ON is getting rid of this book of business because the benefits (to the client) are more beneficial than they want to pay. These products have locked in benefits far beyond what ON originally expected.

    Just to clarify, that is good for the client. Not bad.

    While I am not a huge fan of VAs, they do have their place at times and with certain clients. And there are certainly some VAs out there that people would be fools to let go of.

    Just like every other product on earth; there are good VAs, ok VAs, and poor VAs. Just like some life policies are more beneficial for clients than others are.

    To claim that all VAs are a rip off shows how little you know about the products and the situation with ON letting go of this block of biz.


    ---

    But I do agree that most carriers do not give a rats ass about agents. Carrier contracts are full of holes that favor the carrier.
     
  4. walthamny
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    walthamny Guru

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    changing the topic back to the end of trails on annuities, if Ohio national gets away with this, Would any independent agent ever sell a FIA with a trail. Almost everyone would chose the option to receive upfront commission. Why as an independent agent take any risk. So they raised their term rates, got out the VA business, more and more they look like NY life or Northwestern Mutual. Lets see if it hurts their overall sales.
     
  5. Tahoe Ray
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    Liked twice because I can't hit the like button again.
     
  6. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    This times 1000.
     
  7. Brian Anderson
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    Brian Anderson Executive Editor

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    Challenges are starting to come...
    LPL broker sues Ohio National for 'unlawful' move on variable annuity compensation

    From the linked article:
    A broker with LPL Financial has filed a class-action lawsuit against Ohio National Life Insurance Co. and two affiliates for the allegedly unlawful termination of trail commissions on certain variable annuity policies.

    The LPL broker, Lance Browning of Whitehouse, Texas, claims Ohio National is "unlawfully trying to change the rules after the game has already started," according to the lawsuit, filed Tuesday in U.S. District Court for the Southern District of Ohio.

    Mr. Browning, who has been an LPL broker since 2012, also claims that Ohio National's decision won't reduce fees for investors, but that instead the insurer will "pocket" the trail commissions that otherwise would have gone to advisers, leading to its "unjust enrichment," according to the complaint.

    Mr. Browning is set to lose around $89,000 a year — a "significant" part of his business — when Ohio National's new policy takes effect in mid-December, according to the lawsuit, Lance Browning v. The Ohio National Life Insurance Co. et al.

    Mr. Browning has sold more than 100 annuities for which he is owed trail commissions, according to the filing, which claims his compensation will be cut even if he continues to provide advice and recommendations to his clients.

    He seeks to represent a class of several thousand brokers who stand to have their compensation for the sale of an Ohio National variable annuity with a GMIB terminated.


    More in the article...
     
  8. jboussea
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    so they let this drag.. pay a settlement .. and they still come out winners.
     
  9. InsuranceAnalyzer
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    I have many years experience modeling Variable Annuity contracts from the insurance company side. For a while I have been contemplating using that same approach to model the contracts for agents and their clients. In general the insurers assume that policyholders will inefficiently exercise their guarantees. Even the new more conservative regulation that the NAIC has approved assumes 20% of all policyholders will not exercise the options at all. Therefore the insurer will receive the rider fees and never pay any benefits that are allowed.

    I have set up an actuarial model of the ONFS GMIB and GMDB for which they have just made public a buyout offer. All the contractual information is available through the prospectuses they filed with the SEC. I can tailor the analysis based on a specific policy's situation. These benefits are worth in aggregate a lot more than the buyout offer. However depending on various factors there are a sizable minority of contracts here the buyout make sense to be 1035'd to new policies.

    I can determine if the buyout is good for the policyholder, if so how the benefits can be reproduced with other insurer products. If the value of the benefits is too high relative to buyout, i can advise the agent and the policyholder what the best strategy to maximize benefits is.

    If you would like more information please let me know.
     
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