Two Main Ways Advisors Earn from Annuities
- Commission-Based Earnings
- Fee-Based Earnings
- How it Works: Advisors charge an ongoing fee to the annuity owner.
- Impact on Annuity: This fee directly affects the annuity’s value, as it is deducted from the account.
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Understanding the Impacts
- Commission Model: The advisor’s commission is typically a percentage of the annuity contract’s value. It’s a one-time payment made by the insurance company, ensuring the advisor’s compensation doesn’t reduce the annuity’s worth.
- Fee Model: This approach aligns the advisor’s ongoing interests with the annuity owner. The fee might be a percentage of the annuity’s value, thus varying as the value changes. It directly reduces the annuity’s value over time.
Related Reading: What Are the Reasons Some Financial Advisors Dislike Annuities?
Both commission and fee models offer different advantages and implications for annuity owners. Understanding these can help in making informed decisions about annuities and the role of financial advisors. Contact us today for a free quote.
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