Let’s use the housing market to put a typical annuity commission structure into perspective. This would be like adding $50,000 in price to home worth $500,000 to compensate the selling agent. On top of that, if the buyers decided to move after six months, they would owe the real estate broker who sold them the house an additional $60,000!
I doubt many consumers would go for this. Unfortunately in the world of annuities, this is the norm.
These numbers are astonishing. The story gets worse. As Scott states, ” Keep in mind this is just the standard commission schedule, it doesn’t include any perks, trips, deferred compensation or compensation that the company may pay their employees for inducing them to recommend their products.”
The chart below shows the total value of an investment after 35 years, assuming $250 contributed monthly with an 8% annual return. The effects of these charges are devastating.