Biden administration to crack down on ‘junk fees’ in retirement plans
November 7, 2023 by Greg Iacurci
You’ll often hear that it’s important to save for retirement independently, whether through an employer-sponsored 401(k) or an IRA that you manage yourself.
Wink’s Moore on the Market:
It appears that Lael Brainard isn’t aware that annuity purchasers do not pay the commissions, which are paid to the insurance agent.
Annuity commissions are paid by insurance companies to the insurance agent.
Because of this, the annuity purchaser has their entire principal payment earning interest/potential interest (based on the product).
So, it is impossible that “[the commissions] can reduce a middle-class household’s retirement savings by 20% — amounting to perhaps tens or even hundreds of thousands of dollars.”
Likewise, I think Acting Secretary Julie Su needs to hear this same message.
Indexed annuities are not “regulated like a security” because they don’t perform like a security; they are life insurance products, where the purchaser cannot lose money as a result of market performance.
I am just baffled that indexed annuities are being singled-out here. Anyone else?
SN: For the benefit of Brainard and Su- I do not endorse any company or products. I merely run a third-party market research firm that tracks life insurance and annuity companies, their products, features, rates, sales, and marketing. -sjm