Compensation For Advisors or Salespeople
Deferred annuities, including fixed, fixed indexed and variable, typically pay the advisor or salesperson 1 percent to 10 percent of the amount invested as a commission, with possible trail options of 25 basis points to 1 percent. Sometimes the advisor can select his payout option, which might be either 7 or 10 percent up front, or 5 percent up front with a 25 basis point trail, or 1 percent to 3 percent up front with a 1 percent trail. Trail commissions are most common in variable annuities while fixed annuities and fixed indexed annuities typically pay an up front commission.
Some firms allow an investor to pick an annuity share class, which determines the salesperson's commission schedule. The main variables are the up-front commission and the trail commission.
Fixed and Indexed Annuity commissions are paid to the agent by the insurance companies the agent represents. Commissions are not paid by the client (annuitant).
"No-load" variable annuities are available on a direct-to-consumer basis from several no-load mutual fund companies. "No-load" means the products have no sales commissions or surrender charges.
Read more about this topic: Annuity (US Financial Products)
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