Displaying items by tag: incentives

(New York)

As inflammatory as it may sound, most of the time media coverage on annuities does not speak the whole truth about why advisors often have a negative opinion of annuities. Of course, there are quite legitimate reasons like higher fees and the possibility of an esoteric product not being a good deal for what a specific retiree actually needs. However, when you get down to it, fee-based advisors have a significant financial incentive to dislike annuities. That incentive? It is that the advisor will not earn fees on the assets in an annuity, which means a client buying one can take recurring revenue out of an advisor’s pocket.

FINSUM: There are legitimate issues with annuities—including bad sales practices in the past—but when you realize this simple fact, it doubly reminds one why brokers sell 99.9% of annuities.

(New York)

Merrill Lynch is giving its herd of advisors a break on their incentive compensation. Brokers at Merrill have a piece of incentive compensation which gives them a bonus if at least 30% of clients use three specific services. But instead of making the cut off for meeting those quotas July of this year, they have extended it to January 2021, giving brokers an extra 6 months to meet those goals. Merrill Lynch says that the change will allow advisors to focus on best serving clients in this volatile period.

FINSUM: Even with the six-month extension, given the market volatility, it will likely be difficult to cross-sell clients into new products.