Broker vs Advisor Sold RILAs: EDU #2527

Chris’s Summary:
Jim and I examine broker vs advisor sold RILAs using real cap rate comparisons from 2024 to highlight how identical contracts can offer different outcomes. We explain how six-year outcome periods work, what locking in gains actually does, and when fees can reduce returns more than commissions. This episode is less about product bias and more about understanding the trade-offs between access, structure, and transparency in how these annuities are priced and delivered.

Jim’s “Pithy” Summary:
Chris and I return to RILAs because, well, June wasn’t enough! We had more to say—especially about the quirks of six-year outcome periods and how they affect investor expectations. A listener email pointed out that clients often get emotionally attached to growing RILA balances, forgetting that those numbers aren’t locked in until the full term ends. That’s especially true with longer terms like six years, where market swings can reverse paper gains. We explain how this can lead to misunderstandings about what’s really protected—and when.

We also dig into the mechanics of locking in gains early. Some RILAs let you reset into a new term right away, while others force you into a cash-style holding account until the original term ends. That difference can make or break your returns. And if you’re thinking “buffered ETFs already do this,” you’re right—we talk about that too.

But the real highlight today is the cap rate comparison between broker vs advisor sold RILAs. Same insurance company. Same date. Same indexes. And yet, in multiple examples, the commission-based version offered meaningfully better cap rates—even after accounting for advisor fees. In one case, the broker version had a 60% cap while the advisor version capped at 30%. So much for the narrative that fee-only automatically means better. It’s a great reminder that both commissions and fees are just compensation structures—and neither tells you whether a product is actually better for the client.

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