Published in 2019
Athene’s Broker Dealer channel FIA is better than what independent insurance agents can sell!
If you sell Athene FIAs in the “independent” channel, you should be upset at what you will read below. It’s really unconscionable for Athene, or any company, to do this. It sets the independent insurance agent up for problems with clients and even potential lawsuits.
Athene Performance Elite 7 (IMO product) vs. the Athene Ascent Accumulator 7 (B/D product)
The first big difference in these products is the participation rates and caps used for growth.
1) BNP Paribas Multi Asset Diversified 5 Index
PE7: 1-year no cap point-to-point index strategy participation rate = 90%
AA7: 1-year no cap point-to-point index strategy participation rate = 100%
B/D product has a 10% higher participation rate.
2) Janus SG Market Consensus Index2
PE7: 1-Year No Cap Point-to-Point Index Strategy participation rate = 50%
AA7: 1-Year No Cap Point-to-Point Index Strategy participation rate = 55%
B/D product has a 5% higher participation rate (which is a 10% increase like above).
PE7: 1-Year S&P Point-to-Point Index Strategy Cap = 4.5%
AA7: 1-Year S&P Point-to-Point Index Strategy Cap = 5.75%
B/D product has a much higher (1.25%) cap on the S&P annual point-to-point cap.
Bail out cap? The B/D product has a 5% bail out cap on the annual S&P point-to-point index.
The IMO product has NO bail out cap.
Minimum guaranteed surrender value
PE7 guarantees is $87,500 +1.5%
AA7 guarantees $100,000 + 1.0%
The AA7 guarantee turns out to be 10% better after owning the product 10 years.
What do you think? If you are an independent agent, you should be outraged!
How can you look a client in the face and sell them an inferior product than what they could purchase from a Series 7 licensed advisor who works with a B/D?
What if the client finds out? What would you say? Ah, hmm, sorry, I don’t have access to the better product so I sold you the inferior one?
What about looking yourself in the face? I don’t know about you, but I could never sell a client an inferior product just so I could make money and because the client doesn’t know any better.
Any good reason the IMO channel product is inferior? Hmm…let me think…could it be because the IMO needs to make a certain override commission?
How can individual agents stop companies from doing this? It’s really simple. Stop selling products where the sister product offered in the B/D channel is better.
But the PE7 is the “best” FIA I can find? No it’s not. There are several alternative products advisors can use that are a good and “suitable” fit for clients.
The “Best FIA that IMOs Won’t Tell You About” has the following characteristics;
1) High caps (annual point-to-point, monthly, etc.)
2) High participation rates on no cap products (including a 100% par rate/NO cap volatility control index option that is really good).
3) High roll up rate on guaranteed income products
4) High payment bands in the income phase on a guaranteed income product
5) Low surrender charge scale
6) High bail out cap
7) Trail fee commission option (1% annually is a great trail)
Oh, and if you are wondering why most IMOs won’t sell the above outlined product, it’s because the override commission is about 1% less than most FIAs.
What advisors do with this information is up to them. Some will continue to do what they always do and some, hopefully most, will scour the FIA marketplace to make sure they are truly offering the “best” FIAs to their clients and ones that don’t have a sister product in the B/D channel that is better.
Bad Advisors: How to Identify Them; How to Avoid Them
If you have not read my book Bad Advisors, I highly recommend you do so. You can download it for FREE in an e-format by clicking on the link below. In the book I have a chapter on B/Ds and insurance agents.
Roccy DeFrancesco, JD, CAPP, CMP