An advisory annuity is a special kind of annuity that is fee-only, instead of commission-based. It is typically sold and managed by a financial advisor who has a special license and is employed by a Registered Investment Advisor (RIA) firm. Registered investment advisors always have a fiduciary duty to act in the client's best interest. A fiduciary duty is the highest standard of trust and care under the law.

The biggest benefit of buying an advisory annuity is professional management and potentially lower cost. The investment advisor acts in the best interest of the client and manages the investment options offered within the advisory annuity on behalf of the client. The second benefit is typically a lower total fee (depending on which advisor a client uses). In addition, a policy owner gets tax-deferred growth and possibly options for converting the money in the annuity into life-time income.

Advisory annuities range from fund-based variable annuities to variable and fixed index annuities, including registered index-linked annuities. They also range from investment-only annuities for tax-deferred asset accumulation to income annuities for guaranteed life-time income. Below are a few examples.

An advisory annuity may or may not have a product fee charged by the insurance company that offers it. The investment advisor typically charges an advisor fee. Depending on the advisor, a client may pay a lower or higher advisor fee on the same advisory annuity. We charge an advisory fee of 0.50% for fixed index advisory annuities, 0.60% for variable index advisory annuities (registered index-linked annuities), and 0.70% for fund-based variable advisory annuities.

The following examples illustrate how the fee structure works.

1. Equitable Investment Edge Advisory. Our client pays a 0.60% advisory fee and no product fee. However, the commission-based counterpart: Equitable Investment Edge, has a 1% product fee. Thus the advisory product, while having exactly same features, is 40% cheaper, if purchased through us. In addition, the advisory product includes professional management and no surrender charge.
2. Jackson Perspective Advisory II. Our client pays a 0.70% advisory fee. The insurance company (Jackson National in this case) charges a product fee of 0.45%. Thus the total annual fee is 1.15%, compared to a 1.30% fee for the corresponding commission-based counterpart: Jackson Perspective II. Note that, the funds in Jackson Perspective Advisory II are typically 0.30% less expensive than in Jackson Perspective II. The total savings in fees for our clients is actually 0.45% per year. Jackson has been the best selling annuity company in the USA for the past many years and Perspective II is the flagship product of Jackson. Now the good features of Perspective II are available in Perspective Advisory II, with added benefits of professional management, lower cost, and no surrender charge.
3. Allianz Index Advantage Income ADV Variable Annuity. Our client pays an annual fee of 0.85% (of which 0.25% is product fee and 0.60% is advisory fee). Note its commission-based counterpart: Allianz Index Advantage Income Variable Annuity, has a product fee of 1.25%. Thus we offer a saving of 0.40%/1.25% = 32%. That is, our price has a 32% discount.