WealthManagement Magazine

Edward Jones Selling A-Share Annuities

Firm discourages B-share products, some reps say.For about a year, Edward Jones has been selling A-share annuities. The products are unique to the firm and were developed in conjunction with several insurance vendors, including Hartford Life, Allstate, Lincoln National and SunAmerica.Upfront loads on the products begin at 5.5% and breakpoint downward. Edward Jones says A-share sales were about $400

Firm discourages B-share products, some reps say.

For about a year, Edward Jones has been selling A-share annuities. The products are unique to the firm and were developed in conjunction with several insurance vendors, including Hartford Life, Allstate, Lincoln National and SunAmerica.

Upfront loads on the products begin at 5.5% and breakpoint downward. Edward Jones says A-share sales were about $400 million in the past year and are growing at an annual rate of more than 20%.

Jones has long pushed upfront load funds over B and C shares, believing the lower ongoing costs of A shares are better for long-term investors.

Annual expenses with the A-share annuities range from 72 to 95 basis points, says Merry Mosbacher, Jones principal of insurance market marketing. The B-share product averages 1.4%, she says.

A few reps grumble that Jones discourages the sale of traditional B-share annuities. They point to the firm's 1-year-old policy that reduces reps' payout on traditional annuities to 35%, instead of the normal 40%.

But Mosbacher says the firm does not have a policy against selling spread-load annuities. She confirms that Jones "significantly reduced" payout for B-share annuities, but says it was done to remove the appearance of a conflict of interest.

"Any consumer would have to be concerned if his rep is making twice as much for the same product," Mosbacher says.

Nevertheless, Jones reps still sell more than $2 billion annually in B-share annuities.

A Jones rep in the Midwest says, "By the time you take away the A-share load, plus the usual fees, I tell some clients, `We'll be lucky if we break even the first year.'"

TAGS: Archive
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish