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May 11, 2006 11:56 pm


Does anyone know what is goingon at Ray Jay with regard to variable annuities?

I do a lot of VA business and I've been told that RJ reduced the amount FA's can make on a sale... He said that my firm (LPL) would be going the same way soon.

Thanks from the Heartland.

May 12, 2006 10:23 am

Who's he that told you LPL is going that way? 

May 12, 2006 10:53 am

Not yet but they are requiring VA companies to lower costs and thus lower some commissions most would be 7% over 7 years

May 12, 2006 12:23 pm

Try reading the board, "Always low prices at RJ";


http://forums.registeredrep.com/forumposts.asp?TID=2306&amp N=1


May 12, 2006 8:19 pm

I admire Ray Jay for stepping up to the plate to reduce the damn fees people pay for those stinkin VAs. Help clean up the industry a little bit at least.

May 14, 2006 12:11 pm
peanutbroker:

I admire Ray Jay for stepping up to the plate to reduce the damn fees people pay for those stinkin VAs. Help clean up the industry a little bit at least.


peanutbrain,


There are few more principles at stake, but clearly this beyond you.


"Independent" dealers don't mandate proprietary products. It's how this firm was built.




May 14, 2006 2:26 pm

Don't these types of changes need to go through the State Insurance Commisioner for approval before being offered to the public?

May 14, 2006 3:13 pm

I noticed LPL recently created  a list of annuity companies whose Index and VA annuities they will allow held in firm name. They won't allow any Index that pays more than 8% or has more than 8 year surrender penalty.


I never cared for Index annuities anyway, so it doesn't bother me. It seems to be LPL's way of limiting liability and still offering a product if people want it.


(I know that may shock you, Peanut- other firms really DO look at what might be best for the client too)


And by the way- RE: RayJay- don't they have A share annuities too? I was told that about two years ago. They wanted to be able to offer them- AGE also. They don't promote them, but they do have them- true or not-anybody?

May 15, 2006 8:07 am

Muny - EIAs are going under the b/d across all firms for the most part now as a result of some regulator comment on who is ultimately liable.  In terms of the VA thing - I don't think you are accurate on that - what LPL is doing is increasing the vendors that can be networked in and that can be completed via electronic application - it has nothing to do with limiting availability.


Side note on RJ Annuity changes - my understanding (FARMBOY HELP HERE IF YOU CAN) is the person running the PCA or at least the annuity biz there is a former ED Jones person who also ran some form of the annuity deal there.

May 15, 2006 12:30 pm

I've heard gossip about Jackson National, GE and Merrill types involved, I don't put much stock in targeting particular people for a corporate decision. You might consider this profile though;


http://www.raymondjames.com/PROFILES/averitt.htm


Frankly it was a big deal and many players were involved from the stories you hear. It's a corporation, it took a whole village to trash the mission statement and rationalize banning the Hartford Director for the time being come July (they'll roll something out later). They've been on a roll recruiting wise (take a five or ten year view of this statement) and the wirehouse people might just rollover and say; "it's not as bad as what I left". Since wirehouses are spitting people out left and right you might follow the logic of three years into a bull market greed takes over. Steering everything into asset management is goal #1 most everywhere now and annuities are the poor orphan to kick for the reasons I've listed. I'm sure they want more of the independent types to leave and they want more wirehouse people on board who are use to being told what to do. If you live in maximum security prison going to a work farm might seem like heaven. It takes awhile for the freedom gene to really take over and realize all (all dealers) they do is overcharge for clearing and line you up as a scapegoat for current and future problems that might happen or as in this case be imagined to cover another agenda. With the likes of some here you can see how dumb the producer consensus can be.


The people mouth-piecing this at RJ might be enthusiastically bone-headed but the serious decisions are made by people issuing the executive memos; Averitt, Helck and Tom James himself.  You should judge and score the event for the whole firm. Likely those with minimal VA investment will shrug their heads but cry when they knock on their doors in the future. While customizing (proprietary) prospectuses is new here it certainly rhymes with many deteriorations of individual producer authority involving pricing and control. RJ plays these matters close to the line since they also own a wirehouse division but I'm sad they crossed it on this. Regardless, all attempts to mitigate this policy by blaming the underlings (reverse Nuremberg Defense) for this result should be rejected.








May 15, 2006 2:34 pm

Farmboy,


So, your take is that RJ is mandating these changes to push FA's and their clients into more fee based accounts?  You might be half right at best.   I think RJ is strying to set an example with regulators.  You might recall the Herula case which they fought to the end (and sorta won) which probably ended up making management realize that even if they "win" against regulators--you still end up losing on PR front.


M&E's are less, and comps are lowered as well in proportion to the changes in fees.  Living and death benefits will be the same.  Anuuities will probably be the next target of regulators, and RJ will likely be in a better postion if they are considered the gold standard.  Which they will as a result of these changes.  As you know, they have press releases all ready to go. 


Keep in mind that RJ will lose producers because of this as well as have their revenue decline.  I don't think of it as being a good business decision at all--I don't.   



May 15, 2006 6:04 pm

Keep in mind where old Chet Helck hails from. Yes, Edward Jones. So he has that same mentality about "a" shares and "a" share annuities. Too bad for Ray Jay.

May 15, 2006 6:07 pm

Time will tell if RJ is ahead of the curve on the regulatory backdrop. I have a hard time imagining such a regulatory guideline coming down on annuity prices as RJ drew up.


I've tried to be fair about the discussion I really have nothing against the firm on the whole. I hoped it would be reversed but here we are with target dates on simple and well know products being banned. 



May 15, 2006 6:12 pm
ezmoney:

Keep in mind where old Chet Helck hails from. Yes, Edward Jones. So he has that same mentality about "a" shares and "a" share annuities. Too bad for Ray Jay.


I don't know directly but I always liked this guys rhetoric, I thought he was pro advisor. I really don't know the insider story of how this was hashed out. I'd like to know mind you.


May 16, 2006 8:03 am

Everyone has been saying annuities are the next target on the radar screen for the last two years, and not much has happened. My opinion is a dollar short and a day late for Ray Jay. The annuity compliannce thing is over with. I'm glad I didn't go indy with Ray Jay. I will be watching LPL before going indy. Dumb move on RJ's part.

May 16, 2006 10:18 am

RJ will have no A shares as part of this annuity transition.


I still like the product offerrings at RJ much better than LPL.  Better bond selection--more automated.  Also have syndicate on preferreds, secondaires, IPO's etc.   Don't do alot of it..but some months I do enough where it adds another 10k gross or so.  LPL still has virtually no investment banking?  Do they still pay no trail on money market and margin balances?


Every firm has issues that we like or don't like--but I'm glad LPL is out there.  In the long term, they compete against each other for OUR business.  But, I'd agree if all I did was drop big annuity tickets all day long--I'd probably look at going elsewhere.  Either that, or change your business.  And, I wouldn't go LPL as they will probably be changing within a year or two.



May 16, 2006 10:53 am

Zacko, hope you're wrong on LPL following suit, although to be honest, I don't know if it would impact me or not.  My typical VA doesn't pay much up front...3-4% and pays trails of 1% starting after one year...are these impacted at RJ?  If they are...oh well.  I'm pretty adaptable, but at the same time, would give serious consideration to moving if I felt like my B/D was making too many changes to improve their bottom line at my expense.  It's just the principal of the thing, and I don't buy RJ's compliance story...I still think there is an ultimate profit motive there, even if the move hurts them initially.


Also, bond buy automation is pretty good here...I input the account number, run a search on the type pf bond I'm looking for, select my bond and quantity, and hit the submit button...that seems fairly simple to me.  As far as selection, I'm not able to run a current comparison, but in general, I don't have any problem finding what I'm looking for.


I think LPL can get in some IPO syndicates now, although I've only attempted to get one small one which wasn't available.  Not my thing in general so to be honest, I don't pay much attention to it.  As far as I know, LPL has no investment banking, and no, unfortunately, I haven't seen any trails on money markets...don't know about margin as I have no margin clients.  With my conservative mentality, and somewhat unsophisticated client base, I've just never suggested it.


I too, am glad that LPL has RJ as a competitor, as these two can keep each other somewhat honest.  If I left LPL, I would give RJ serious consideration, as I have concern that smaller B/Ds may or may not be able to deliver everything (or at least most everything) that I view as critical to my business.  Too, smaller B/Ds will probably get gobbled up by larger B/Ds and you'll end up right where you started.  No doubt about it...choosing a B/D is really a search for the best fit for a particular way of doing business.

May 16, 2006 5:49 pm
zacko:

Farmboy,


So, your take is that RJ is mandating these changes to push FA's and their clients into more fee based accounts?  You might be half right at best.   I think RJ is strying to set an example with regulators.  You might recall the Herula case which they fought to the end (and sorta won) which probably ended up making management realize that even if they "win" against regulators--you still end up losing on PR front.


M&E's are less, and comps are lowered as well in proportion to the changes in fees.  Living and death benefits will be the same.  Anuuities will probably be the next target of regulators, and RJ will likely be in a better postion if they are considered the gold standard.  Which they will as a result of these changes.  As you know, they have press releases all ready to go. 


Keep in mind that RJ will lose producers because of this as well as have their revenue decline.  I don't think of it as being a good business decision at all--I don't.   



May 16, 2006 5:52 pm



M&E will be reduced, but RJ is allowing the insurance companies to increase their 12-B1 fees.  It is possible that M&E reduction+12b-1increase= higher costs for the client... Not smart IMO.

May 16, 2006 7:21 pm

EZ-Money



Annuity compliance over? It has just begun. And Ray James will not be the

only one cutting commissions.