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  •  I'll give you an example (3+ / 0-)
    Recommended by:
    Melanie in IA, kyril, foresterbob

    You have a client who wants to contribute to a pension.

    Your choices are to offer an annual premium plan, or a monthly payment.

    The annual plan is rather more efficient and the commission is paid as a proportion of the premium. You will be paid a small amount, every year until the plan vests.

    The monthly plan has higher fees attached, so not quite so good (but still decent) for the client, but you are paid upfront on the assumption that the plan will run to retirement ... That is, the agent will get 75% of projected commission as a lump sum, next month.

    Which do you recommend?

    I hope that the quality of debate will improve,
    but I fear we will remain Democrats.

    by twigg on Thu Apr 12, 2012 at 06:33:08 AM PDT

    [ Parent ]

    •  I talk to the client about the relative (2+ / 0-)
      Recommended by:
      twigg, kyril

      benefits of both, the disadvantage of the higher fee structure on the monthly premium but recognize that may fit into their budgeting better, and leave them less chance of being underfunded at the end of the year. But they should get to choose how often they want to pay the premium, given that information.

      •  Well yes, of course you would (2+ / 0-)
        Recommended by:
        Melanie in IA, kyril

        and in doing so you might get $50 a year commission for 20 years, or $750 up front, then $250 spread over 20 years.

        No agent should go into a consultation with that kind of pressure. The honest ones will do the right thing, and offer the options, but many won't.

        As you say, many clients will choose the monthly plan anyway.

        A good company would let you charge the client $200 for the consultation, then rebate all the commission back to the client, in the form of reduced charges and a more efficient plan.

        That way there is no pressure to sell anything specific, and the client is motivated to pay attention :)

        I hope that the quality of debate will improve,
        but I fear we will remain Democrats.

        by twigg on Thu Apr 12, 2012 at 07:15:10 AM PDT

        [ Parent ]

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