Please realize that there are three parties to the financial benefits of an annuity sale: the insurance company, the agent and the buyer. If you seek to sell those annuities that pay the highest commission, realize that means less for the other two parties. Do you think that the insurance company is paying you more so they can take less? Doubtful. In most cases, if the annuity pays you an unreasonable high commission, it comes out of the pocket of the annuity buyer as a longer surrender period, higher surrender fees, a lower interest crediting rate, a higher margin or lower participation rate (in the case of index annuities) or some other features which leaves the annuity buyer worse off. Amazingly, some annuity agents think the extra commission comes out of thin air. So in reading this post, consider what is a fair and ethical balance of benefits to all three parties when selling annuities.
Annuity commissions vary greatly, but as a broker or agent, you may want to find the highest commissions possible. After all, you have a family to feed, a retirement to plan and bills to pay! Earning high commissions depends on two factors – finding annuities to market that offer high commissions to agents and brokers, and gathering annuity leads with large assets that can be rolled into annuities. If it seems as if these high-paying annuity leads aren’t coming your way, read on. The high commission annuities are out there – you just have to find them.
• Make sure you have a large number of leads.
How can you earn high commissions if you have no one to sell to? Advertising will bring you leads, but you can’t rely on advertising alone to bring you new clients. You have to find some leads on your own. You can buy leads from a company or partner with another business person, such as a mortgage broker, to share leads. You can also generate leads from personal connections. Anyone you know – former classmates, friends, civic clubs – may be interested in purchasing an annuity, or may know of someone else that could be a potential client.
• Within this large batch of leads, you’ll be able to identify potential leads that will bring in higher commissions.
Determining which leads are best requires you to “qualify the lead.” This includes a fair bit of research. Find out all you can about the lead, in terms of assets, mortgage information, the names of agents they use. Do they have life insurance policies, IRA’s, 401K plans or mutual funds that can be converted into an annuity? The larger the size of the prospect’s assets, the higher your commission will be.
• Sell annuities that have long shelf lives.
The longer the annuity surrender period, the higher your commission. This makes sense – the longer the money is in the annuity, the more the insurance company will earn, consequently, the higher the commission they can offer you to sell a particular annuity.
• Market index annuities
These annuities usually bring higher commissions – at least eight percent in most cases. Because of the moving parts of an index annuity, an insurance company can easily “bury” more profit in the contract as it is virtually impossible for the agent or the annuity buyer to determine what the buyer might earn, so the insurance companies may offer a higher commission to agents who can move them. However, if a commission seems too high to you, make sure to read the terms carefully to be sure there’s nothing fishy about the annuity, as explained in the first paragraph.
When looking for high commission annuities to sell, remember your ethics. One of the biggest criticisms of annuities is that sales people force their clients to purchase annuities they don’t need in order to draw a bigger commission. The high commission leads are out there, and you don’t have to be unethical to find them. Keep in mind that because of a small number of unethical annuity agents, regulation and scrutiny is increasing. Make sure you abide by these regulations as you seek out these high commission annuities.
In the long run, it may pay to sell annuities that pay less generous commission, pay a higher yield to the client and gain you more referrals and more clients.