Typicall Comissions ?

[myinsurebiz]

I would go with Standard and AIG over Oxford (ratings) but Oxford has slightly better rates and smaller minimums (top AIG and Standard rates are 100k+) so they are worth having.

Plenty of annuity carriers are a PITA to work with so pick your poison.

I just don't want to have appointments with 20 carriers in each field - SIWL and Annuities . . .

I'd like to send biz to 3 or 4 in each tops. Minimize my efforts and Maximize my loyalty. Win a few trips each year . . . Not have 543 different forms in my bag / bookmarks . . .

 

[scagnt83]

Can you elaborate a little on the difference please?

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[myinsurebiz]

I would go with Standard and AIG over Oxford (ratings) but Oxford has slightly better rates and smaller minimums (top AIG and Standard rates are 100k+) so they are worth having.

Plenty of annuity carriers are a PITA to work with so pick your poison.

Thanks Ray . . . I'm going to go with Sentinel, NA and Allianz for my A rated and FFG for those that want the best % . . .

I learned alot today about FIA and FIUL's and GUL's . . .

 

[MartinJ]

How would the fiduciary ruling affect up front commissions?

What's to stop a company from offering annuities with no commissions at all? By lowering commissions to zero that should allow the insurance company to offer the best annuity possible.

 

[goillini52]

What's to stop a company from offering annuities with no commissions at all? By lowering commissions to zero that should allow the insurance company to offer the best annuity possible.

Ummmmmm, let's see...because no agent would sell them at zero commissions.

 

[Tahoe Ray]

What's to stop a company from offering annuities with no commissions at all? By lowering commissions to zero that should allow the insurance company to offer the best annuity possible.

Every player in the industry has created or is the process of offering this option.

 

[DHK]

What's to stop a company from offering annuities with no commissions at all? By lowering commissions to zero that should allow the insurance company to offer the best annuity possible.

1. Annuities are SOLD more than they are BOUGHT.

It takes an agent to (hopefully) properly explain them and how they can fit into someone's long-term retirement income plan.

2. Agents do not work for free.

Companies looking to strip commissions out of the product are looking to expand their offerings into the RIA world where they take a vow against commission income for fear of "commission conflict of interest". They have this fear as though commissions are so evil that they'll sway you to kill your mother, rather than figure out reasonable product mixes that benefit the client.

3. Define "best"?

Annuities are, by their very nature, ill-liquid. Annuities have guarantees - which will erode against a "top possible return" - even variable annuities due to their fees. Guarantees have certain costs.

If you're afraid of surrender charges, then you don't understand how annuities are supposed to work. Which may be true of some of these "commission-fearing" RIAs - who think that annuities are only sold because of the commissions. Well, no one forces someone to buy and no one forces them to keep the annuities. If it was truly misrepresented, a complaint could be filed against the agent and let an arbitration issue go forward.

Well these same RIAs are also going to charge an AUM fee of about 1% per year as a HARD CHARGE against the balance. Fixed and Fixed Indexed Annuities do NOT have these hard charges (aside from optional lifetime benefit rider fees) AND (depending on the commission option chosen) can pay a trail commission without charge against the annuity contract. No, it won't be 1%, but it still doesn't charge an additional charge against the balance.

 

[junkman]

Just for educational purposes, compound any investment stream out 20 yrs at a given return. Then subtract 1% and compare the ending value. There is a huge difference. Your information had better be worth something.

I asked my stock broker CFP, CFA friends whether the theory has changed since I got out of school and whether they use it when managing a portfolio. It hasn't and they don't. 1% is a significant dollar amount so I've spent the last month reacquainted myself and tracking down data to implement the changes myself.

I have a son getting ready for college and remember a friend doing college planning and moving assets off balance sheet for expected family contribution to annuities where they don't count. I haven't found anything that makes sense given the low returns of fixed and loads on indexed and variable annuities. I'm looking at expect net return after expenses and adding college tuition savings. There is a 5-10 yr time horizon and willingness to accept surrender charges and illiquidity for return. What would you sell? I have others that are looking for similar solutions if I can convince myself. Ideas?

I note that most lA have caps and none I've found receive dividends. This brings their return way down. So far, it's about a wash between moving the money and paying the tuition. This is unfortunate. I'd rather keep the money but it doesn't look likely.

 

[DHK]

Your post makes no sense to me. Therefore, I will take it apart and talk about it.

Just for educational purposes, compound any investment stream out 20 yrs at a given return. Then subtract 1% and compare the ending value. There is a huge difference. Your information had better be worth something.

Let's get into the real world: What is YOUR assumption of a "given return"? There is NO SECURITY in securities. Only risk profiles and strategies of managing those portfolios. Passive, Active, Tactical, and Strategic portfolio management on the fee-based securities side.

I asked my stock broker CFP, CFA friends whether the theory has changed since I got out of school and whether they use it when managing a portfolio. It hasn't and they don't. 1% is a significant dollar amount so I've spent the last month reacquainted myself and tracking down data to implement the changes myself.

These are the same people who are "anti-commission" for annuities because they don't understand them. They believe that products that are only "sold for commission" must be evil because they cannot charge a management fee of up to 2.5% per year.

With retirement planning, the more you are relying on a given return, the more risk you have that you will run out of money. Only annuities have guaranteed lifetime incomes available regardless of the stock market.

I have a son getting ready for college and remember a friend doing college planning and moving assets off balance sheet for expected family contribution to annuities where they don't count.

This *may* be a good idea, but without doing a fact-find, I'm not going to give it a professional recommendation. If the assets were already earmarked for retirement, then it's probably a good idea, especially with a living benefit rider that will increase the value of the future cash flow from that asset.

I haven't found anything that makes sense given the low returns of fixed and loads on indexed and variable annuities.

What "loads" are you talking about? Annuities have 100% of your money in the product. Annuities may have surrender charges if you go past 10% of the annual value in any given year.

Variable annuities have M&E (the option of annuitizing has a cost), mutual fund expenses, and optional rider fees. This adds up to about 3-3.5%. But that's unique to variable annuities.

Fixed Indexed Annuities are principal protected, so caps are a function of the current interest rate environment. Right now, my own "theory" of caps is like this: "Bank rate + 3%". It seems to work right now and it fits because it is a PRINCIPAL-PROTECTED asset.

ProducersWeb - Annuities - Deferred annuity surrender charges are owner benefits

What "low returns" are you comparing? Oh, you're under the impression that a 3% cap on a Fixed Indexed Annuity is not 'sexy' enough compared to a fully at-risk portfolio? Ah. Well, it's not an appropriate comparison to make really because sometimes "Zero is your Hero" to help you avoid the losses. Sometimes avoiding the losses is FAR more important than chasing gains... but CFP and CFAs are too busy telling you "how smart they are".

I'm not that smart to think I'm smart enough to put people's money at risk - not anymore.

I'm looking at expect net return after expenses and adding college tuition savings. There is a 5-10 yr time horizon and willingness to accept surrender charges and illiquidity for return. What would you sell? I have others that are looking for similar solutions if I can convince myself. Ideas?

That depends on who you are asking for advice and what you're looking for. For this area of "college planning" through sheltering assets from the FAFSA using annuities... age plays the biggest part on whether it would really work for the person or not.

I note that most lA have caps and none I've found receive dividends. This brings their return way down.

That's because the insurance company uses anticipated returns from the general account to purchase stock options. Dividends are only a function of those who OWN the underlying index. FIAs do not own nor directly invest in the underlying index, therefore have no downside risk NOR are entitled to dividends. The option strike prices also show why there is a cap.

So far, it's about a wash between moving the money and paying the tuition. This is unfortunate. I'd rather keep the money but it doesn't look likely.

All of this doesn't mean that it's "Annuities for everyone". However, it does mean that many people in the investment business doesn't understand a proper allocation to annuities to help keep investment portfolios intact during down years and avoiding "reverse-dollar-cost-averaging" when "sequence of returns" risk is prevalent.

 

[MartinJ]

Ummmmmm, let's see...because no agent would sell them at zero commissions.

Yes but isn't the whole point of fiduciary duty to do what is best for the client while being oblivious to commissions?