Annuity Solution for Advisors

Why can’t an unregistered advisor receive an annuity trail?

Many financial advisors who “break away” to become registered investment advisors (RIAs), wish to drop their Series 6 (S6) and Series 7 (S7) registrations. As RIAs, they need a Series 65 to provide advice and analysis in return for an advisory fee based on assets under management. Even though annuity trails may seem like a fee for advisory services, they are considered commissions, and only a broker-dealer and its registered representatives may receive commissions.

Consequently, break-away advisors with annuity trails-paying investments must choose from several bad options:

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Abandon the annuity or work for free.

Abandoning a client or working for free is not a choice an advisor wants to make.

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Convert the investment into a share class that has no trails or 12b-1 fees and then place the annuity investment under an advisory contract

This is a good solution for mutual funds, because most mutual funds will permit a tax free exchanges into other share classes, but annuities cannot be exchanged in the same way.

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Become dual-registered with a “friendly” broker-dealer

If an advisor seeks to conduct new transaction-based commission business, this is the only option. Advisors maintain their S6 or S7, and all of their financial business, including business conducted under the unrelated RIA, becomes subject to the broker-dealer’s supervision.

Call AnnuityFix and get paid as an RIA to service the annuities

Through AnnuityFix, financial advisors drop their S6 or S7, assign their trails-paying annuities to Johnstone Brokerage Services (JBS), and get paid advisory fee based on assets under management.

Client’s best interest

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Client doesn’t feel abandoned or encouraged to arbitrarily change investments

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Client enjoys continuity of service with their financial advisor

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Client is able to avoid surrender charges and preserve beneficial riders

Advisor’s best interest

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Advisor retains client

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Advisor is paid to provide advisory services (not based on transactions)

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Advisor avoids non-applicable compliance requirements related to conducting transaction business

Annuity company’s best interest

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Annuity contracts are retained by annuity companies.

Do you have trails-paying annuities you wish to service as an RIA?

AnnuityFix is a simple solution for Registered Investment Advisors (RIAs) who wish to service broker-dealer annuities for an advisory fee.

Have questions?
Give us a call (936) 340-2929