March 12, 2019 by Diana Britton
Russ Norwood, CEO and founding partner of Venturi Wealth Management in Austin, Texas, was recently in a meeting with a client and, reviewing his portfolios, discovered three variable annuities, paying a thick commission stream to the agent who sold them.
“Probably close to 20 percent of his assets are tied up in these annuity contracts,” says Norwood, a fee-only advisor. Instead of shrugging his shoulders and moving on, Norwood will likely roll them over to one or more of a new breed of annuities, designed to do away with the commission structure or otherwise make the insurance contracts more appealing to registered investment advisors.
“There’s been a lot of product innovation in the last 10 to 15 years with annuities. For a client to go from a commission-based product to a no-load or low-load product, where you strip out the commission structure, results in substantial savings. In his case, it’d be $10,000 plus a year in savings and internal expenses that would go away.”