Commission vs. Advisory Annuities: Why the Fee Structure Actually Matters

July 2, 2025

When we talk with clients about annuities, one of the most important things we explain is the difference between commission based annuities and advisory annuities with no commissions. At first glance, it might seem like just a payment detail but it’s actually a big deal that can affect the quality of the product and your overall experience.

Commission based annuities are sold through insurance agents who earn their pay when the product is sold. Because of that, the product is often designed to recover that commission. That can mean higher internal fees, longer surrender periods, and fewer flexible features built in. You might not notice it at first, but over time, those costs can quietly eat into the value.

Advisory annuities are different. There’s no commission baked in. Instead, your advisor earns a straightforward fee for managing the account, just like with an investment portfolio. Because there’s no commission to pay out, the product doesn’t need to be loaded with hidden costs or long lockups. That opens the door for lower fees, cleaner design, and more modern features: like better liquidity, shorter surrender periods, or more efficient income options.

Here’s one way to think about it. Imagine you’re building a custom home. With a commission annuity, part of your budget is already spent on a sales team, so the materials and design may be limited. With an advisory annuity, more of your money goes directly into the build; better finishes, more room for upgrades, and fewer restrictions on how you use the space.

That doesn’t mean commission based annuities don’t have their place. Some offer solid guarantees or niche features that may suit specific needs. But when you strip out the commission and start with a clean slate, the product can simply be built better from the ground up.

At Greenberg, we don’t believe in pushing products. We believe in designing solutions that actually serve your long term goals. If you want to understand what you own, or explore whether a better version exists, we’re here to help. Straightforward advice. No pressure. Just what’s best for you. Give us a call at 5205444909 for your free annuity review today!