A commission is a transaction fee earned by a broker or investment adviser for buying or selling a security on behalf of a client. Commissions are a major form of revenue for brokerage firms. A commissioned broker earns a fee for every trade execution. This type of arrangement raises the possibility of churning or excess activity in an account just to generate commissions. Discount brokerages tend to charge the lowest commissions but they may not offer any guidance or research. There are soft-dollar commissions which come commission revenues generated by brokerage activity are directed by the institutional investment managers that generated the activity. Soft dollar commissions are directed by the investment managers towards goods and services that are intended to be of benefit to actual clients. Examples of goods and services include software, research and computer equipment.

SEC Files Administrative Complaint Against Annuities Firm Prime Capital Services, Inc

The Securities and Exchange Commission (SEC) has filed an administrative complaint against the New York based annuities firm Prime Capital Services, Inc and its parent company Gilman Ciocia. The SEC claims that Prime Capital Services lured-in elderly investors in Florida with free lunch seminars. The firm allegedly sold unsuitable variable annuities to the elderly investors: The sales pitches, the SEC claims, concealed high costs, lock-in costs and made "material misrepresentations and...

Manulife Under Pressure - Hurt by Lack of Hedging in Variable Annuity Business

Canadian insurer Manulife Financial is under investigation by the Ontario Securities Commission for failing to disclose certain obligations related to its variable annuity products. Manulife's stock price has been under pressure and the company had to draw down a $3 billon loan. Manulife, the parent of John Hancock , has reported billion dollar earnings losses in its two most recent quarters. The company is suffering from the decision not to hedge effectively within its variable annuity...
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Financial Advisor Views on Annuities Appear Tightly Related to Business Models

A recent study from Cerulli Associates indicates that registered investment advisors (RIA) are more than hesitant to recommend annuities to their clients.

The report surveys and compares the views of various forms of financial advisors.  Not surprisingly, financial advisors’ product views are tightly related to the financial incentives that support their business models.  Consider, for example, the following:

  1. Only 7% of insurance company representatives would be reluctant
  2. ...
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Battle Lines Being Drawn Over Fiduciary Status of Financial Advisors

There is a key point of distinction that exists in the world of financial advice and vast majority of people are unaware that it exists. 

The defining issue is whether a...