Do I Need to Become an RIA if I Sell Annuities?
Annuities are insurance products that guarantee an income to you for your entire life, or for a set period of time. Deferred annuities defer this payment until you specify when you would like to receive your payments. Even though annuities constitute a retirement savings vehicle, you do not need to become a Registered Investment Adviser to sell them.
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Types
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There are two ways that financial advisers make money from annuities. First, commissioned salespeople earn a percentage of the premium deposited into the annuity. This is the most common arrangement. A lesser known way to sell annuities is to become a Registered Investment Adviser. By doing this, you can sell low or no commission annuities.
Function
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Registered investment advisers, or RIAs, who sell non-commission-able annuities reduce the cost of the annuity to the policyholder. This, in turn, allows the policyholder to earn more money inside of the annuity.
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Significance
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Because no commissions are charged on non-commission-able annuities, the insurance company does not have to pay a life insurance agent any commissions. This means that interest crediting potential can be higher, guaranteed crediting rates can be higher, and mutual fund fees, where applicable, can be lower.
Benefits
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The benefit of selling annuities as an RIA is that your clients may accumulate more money in their annuity when compared to a commission-able annuity. More money for your clients means that your clients will have more retirement income.
Considerations
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Even though non-commission-able annuities might be cheaper to own for the client, they don't always translate into higher investment earnings. Some annuities, like variable annuities, are highly dependent on the performance of the mutual funds to determine the annuity account balance.
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