Annuity Boiler Rooms?

Last year $358 billion came out of 401(k)s into rollover IRAs and there’s another $2.1 trillion expected to follow between 2014 and 2018. This is money that’s going to require excellent stewardship – we’re living way longer than 70 years old these days.

The insurance-industrial complex is well aware of these figure as are the brokerage firms. They’re “training” the salesforce to maximize the opportunity.

via Jason Zweig at the Wall Street Journal:

One adviser recently forwarded me two emails he had received from Table Bay. The first offered a Maserati to advisers who sell at least $7.5 million in annuities in 2014 and a BMW, Range Rover or Porsche for at least $6 million in sales.

The second email linked to a flier for a seminar featuring an index annuity paying a 9% commission. The flier promised that the seminar would help convert “shoppers” and “plate-lickers” into customers, producing “HUGE commissions.”

Could awarding Maseratis and other luxury cars encourage advisers to favor high-fee products that might not be ideal for clients?

Perverse incentives, perverse outcomes.


Who’s Training Your Retirement Navigator? (WSJ)


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