National Life Group's Conflicted Bonus Commissions
Paying bonus commissions for submitting more premium is a major conflict of interest
Most educators (or school district administrators) are unaware of the massive conflicts of interests that are present with the predatory sales agents that frequent school districts selling financial products.
One conflict of interest is when an annuity company pays “bonus” commissions for sales agents who submit higher amounts of business. National Life Group recently put out a promotion for their reps (see pdf below) that pays them higher bonus commissions for submitting more business.
For as little as an extra $600,000 in premiums, a rep can earn an extra .50%, that’s $3,000. If the rep keeps placing business with NLG and can hit $3.5 million during the quarter, the bonus triples to 1.5%. That 1.5% is on the entire premium submitted.
If you receive the same commission with several annuity company products, but one company offers you a bonus structure like NLG, you have an incentive to ONLY recommend the NLG products. In this case a representative can earn more than $50,000 in extra commissions by focusing their recommendations on NLG products.
These types of conflicts should NOT be present in any well run retirement plan.
These conflicts are very common in the world of 403(b).
Scott Dauenhauer, CFP, MPAS