In this video installment, we are addressing the pundits’ primary punching bag — one seemingly more evil than tyrannical dictators, terrorists, or 1950s movie creatures from out of the lagoon. That is, of course, annuity commissions.
Actually, we are told, it is not just annuity commissions that are evil, but all forms of insurance product commissions. And probably not just insurance product commissions, but any kind of commissioned sales agent from any industry.
(Related: Gap-Filler Distributor Pays More Commissions)
While we’re at it, it’s not just pundits who hate them, but, more importantly, politicians too. While the video today does not attempt to specifically address the travails of the U.S. Department of Labor fiduciary rulings, we suspect that commission hatred is a primary driver of that whole effort. Instead, we want to take a basic look at agent/advisor annuity compensation unencumbered by the effects of any current regulatory efforts.
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So to start, we’ve put together a video to do a comparison of the typical costs of annuity commissions versus other ways agents/advisors get paid.
I want to emphasize, that the point of the video is not to endorse one method of compensation over another, but to merely show that commissions are not inherently evil or costly compared to any other.
I also think commissioned agents/advisors often make a major mistake in the way that they defend commissions. For example, the Affordable Care Act (ACA) put a major squeeze on agent compensation for health insurance. Agents defended their compensation by arguing that they provided a valuable service to customers in helping them to understand and choose amongst all their complex health insurance choices. Poorly trained, inexperienced, ACA “navigators” are a poor substitute. Of course, that is all true, but it does not go far enough to justify commissions.