Indexed annuity commission averages 4.6 percent

The average street-level commission for indexed annuities was 4.6 percent as of the second quarter, according to Wink Inc.‘s sales and marketing report.

This is the lowest commission level in a decade. Average commissions were 8.1 percent during the second quarter of 2006 and have fallen steadily since then, according to Wink’s data.

Moore Market Intelligence, which consults on indexed insurance products and tracks annuity product features, found commissions on indexed annuities range from 2 percent to 12 percent, with the majority paying a commission between 7 percent and 7.99 percent. The commission is generally 50 percent lower for older annuitants, the firm said.

Commission trends could play a key role as the industry tries to determine what reasonable compensation should be as required by the U.S. Department of Labor’s fiduciary rule released in April. The rule requires firms and advisors to only charge a reasonable compensation for their services. However, the Labor Department left the definition of reasonable compensation up to the industry’s interpretation.