Annuity payout

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Jan 11, 2007 11:41 am

We were paid grid on a recent VA. Grid being 45%. The annuity paid the firm 5%. What's the payout on VA biz at your firm? THX, T

Jan 11, 2007 12:00 pm

OY!


You're asking the question that it is hoped is never asked.


The payout here is 90% but that's not really the issue...


The DLS is what I'm getting 90% on. Wirehousess give the rep a haircut before they ever even see the annuity gross. There is one company that pays me 5 3/4% and the rep at Barney gets 4 1/4 for the same product (others might even get more then me, I don't know and the wholesaler is absolutely not supposed to tell you!).


Therefore, even if I got the same payout as the Barney Rubbler on a 100M ticket (call it 40%) I'd be getting 40% of $5,750 and the other guy, on $4,250.


It varies with carrier. I'm afraid to tell what particular names pay here.


Mr. A

Jan 11, 2007 12:12 pm

Up to 7.25% (typically 7%) for the average 7 year surrender, lowest M&E VA (shorter surrenders = higher M&E on same VA)


My lowest payout is 30% (on $10,000 to $20,000 in gross in a month).  Highest is 40% at $50,000 plus.



As a side note, I just wanted to compare wirehouse payout to bank payout.


For the wirehouse, using Bondguy's numbers.


On a $100,000 VA at 5% gross = $5,000 gross


$5,000 at 45% = $2250 net pay to broker



For the bank, using my avg payout 35%


On a $100,000 VA at 7% gross = $7000


$7000 at 32.5 = $2,450



Just for those who think bank's payouts are low, you must remember, wirehouses have dirty little secrets called haircuts.

Jan 11, 2007 12:18 pm

Yeah, but you might be talking about two different annuity companies.


Mr. A

Jan 11, 2007 12:25 pm

I just got 5% on a three year surrender (I'm in NY) with a 90% (from which I'll pay expenses, and a $27 ticket charge.


100M = 5M x .9 = 4,500 - 27= 4,473 - 4,473 for expenses = $0, but now most everything else if all mine!

Jan 11, 2007 12:29 pm

BTW Bondguy, how about a little help in my "Competitive Yields " thread? http://forums.registeredrep.com/forumposts.asp?TID=3777&amp N=1


Mr. A

Jan 11, 2007 11:42 pm

Hey guys..


We get  a 4% payout here as they tell us that it is for the good of the client..yet they keep the difference ..so we just go to lower up fronts but collect 1% trails.. and my cut is the same as  everyone else 40% and a 1-6 % annual bonus at year end ( not that you asked that part ..but in reality it is part of the comp on what you write!)


my 2 cents

Jan 12, 2007 8:22 am
BondGuy:

We were paid grid on a recent VA. Grid being 45%. The annuity paid the firm 5%. What's the payout on VA biz at your firm? THX, T



The bank paid your firm at least 7%. They didn't tell you about the haircut.

Jan 12, 2007 11:28 am
mranonymous2u:

BTW Bondguy, how about a little help in my "Competitive Yields " thread? http://forums.registeredrep.com/forumposts.asp?TID=3777&amp ; N=1


Mr. A



Mr A, I took a good look at that thread and decided to pass on a comparison. There are so many variabes within munis that unless we are comparing exactly the same issue, purchased from the same source, in exactly the same block size, at exactly the same time, it is impossible to compare pricing as it relates to firm mark up. Not to mention strong traders vs average traders. So, no comparisons from me.


That said, the majors step all over the bonds adding mark ups before retail sees them. Retail advisors are the built in client base that drive profits for the bond trading desks. Regoinals mark up too, but even a smaller producer such as myself, who does a lot of muni biz ,has some leverage in negotiating the markup. However, there are paybacks. There is no free lunch.


Jan 12, 2007 12:11 pm
BondGuy:

We were paid grid on a recent VA. Grid being 45%. The annuity paid the firm 5%. What's the payout on VA biz at your firm? THX, T



I'm assuming you are referring to commission option A on a 8 year VA contract?


Jan 12, 2007 12:15 pm
Mike Damone:
BondGuy:

We were paid grid on a recent VA. Grid being 45%. The annuity paid the firm 5%. What's the payout on VA biz at your firm? THX, T



I'm assuming you are referring to commission option A on a 8 year VA contract?


Mike, I'm not an annuity guy so i don't even know what that means. My partner, who is my wife, did the annuity in her number. I'll try to relay the question. THX

Jan 12, 2007 12:50 pm
BankFC:

Up to 7.25% (typically 7%) for the average 7 year surrender, lowest M&E VA (shorter surrenders = higher M&E on same VA)


My lowest payout is 30% (on $10,000 to $20,000 in gross in a month).  Highest is 40% at $50,000 plus.



As a side note, I just wanted to compare wirehouse payout to bank payout.


For the wirehouse, using Bondguy's numbers.


On a $100,000 VA at 5% gross = $5,000 gross


$5,000 at 45% = $2250 net pay to broker



For the bank, using my avg payout 35%


On a $100,000 VA at 7% gross = $7000


$7000 at 32.5 = $2,450



Just for those who think bank's payouts are low, you must remember, wirehouses have dirty little secrets called haircuts.



I would make $6300 on the same piece of business...before taxes of course.

Jan 12, 2007 1:31 pm
joedabrkr:
BankFC:

Up to 7.25% (typically 7%) for the average 7 year surrender, lowest M&E VA (shorter surrenders = higher M&E on same VA)


My lowest payout is 30% (on $10,000 to $20,000 in gross in a month).  Highest is 40% at $50,000 plus.



As a side note, I just wanted to compare wirehouse payout to bank payout.


For the wirehouse, using Bondguy's numbers.


On a $100,000 VA at 5% gross = $5,000 gross


$5,000 at 45% = $2250 net pay to broker



For the bank, using my avg payout 35%


On a $100,000 VA at 7% gross = $7000


$7000 at 32.5 = $2,450



Just for those who think bank's payouts are low, you must remember, wirehouses have dirty little secrets called haircuts.




I would make $6300 on the same piece of business...before taxes of course.


Me too.

Jan 12, 2007 6:43 pm

Well, I'm at $112,000 in gross in December and this month combined...so I'll take my measly 40%.

Jan 12, 2007 7:10 pm

So you're proud about working twice as hard as I do for the same money?

Jan 12, 2007 9:41 pm
BankFC:

Well, I'm at $112,000 in gross in December and this month combined...so I'll take my measly 40%.


Of course you are.

Jan 13, 2007 11:31 pm

Isn't that the point?


I don't work twice as hard as you (if I do you must be retired or dead).


Jan 15, 2007 9:37 am
BankFC:

Isn't that the point?


I don't work twice as hard as you (if I do you must be retired or dead).




Who are you talking to and what are you talking about?

Jan 15, 2007 12:10 pm
joedabrkr:
BankFC:

For the bank, using my avg payout 35%

On a $100,000 VA at 7% gross = $7000


$7000 at 32.5 = $2,450



I would make $6300 on the same piece of business...before taxes of course.


I think the above demonstrates that you'll do twice the work for the same money.  Even after all my expenses, I still expect that I net more than 2X what you do on the same piece of business.  As far as me working harder to get the same ticket, I thought that might be the case before I went indy, but at least for me, it's not.  You get your referrals from bank employees motivated by referral fees...I get mine from clients motivated by wanting to see me to do well.  Without question, client loyalty is much better since I left the bank and client referrals are infinitely better than a lot of the junk I got back at the bank.


You'll fill out yet another call report for your manager, suffer through another meaningless employee pep session, and/or see your grid stretched for the 6th time in the past five years (management will always tell you that it's "better" even though you get paid less for the same gross).  So don't be surprised if you decide some day that the bank's deal isn't so hot after all...

Jan 15, 2007 1:16 pm
Indyone:
joedabrkr:
BankFC:

For the bank, using my avg payout 35%

On a $100,000 VA at 7% gross = $7000


$7000 at 32.5 = $2,450



I would make $6300 on the same piece of business...before taxes of course.


I think the above demonstrates that you'll do twice the work for the same money.  Even after all my expenses, I still expect that I net more than 2X what you do on the same piece of business.  As far as me working harder to get the same ticket, I thought that might be the case before I went indy, but at least for me, it's not.  You get your referrals from bank employees motivated by referral fees...I get mine from clients motivated by wanting to see me to do well.  Without question, client loyalty is much better since I left the bank and client referrals are infinitely better than a lot of the junk I got back at the bank.


You'll fill out yet another call report for your manager, suffer through another meaningless employee pep session, and/or see your grid stretched for the 6th time in the past five years (management will always tell you that it's "better" even though you get paid less for the same gross).  So don't be surprised if you decide some day that the bank's deal isn't so hot after all...



Bankfc is making about a million bucks/year. He'll never leave the bank.