JP Morgan has decided to slash advisor payouts on some packaged products as of yesterday in a memo that was viewed by BrokerChalk and discussed with several advisors at the firm. The reduction in payouts hits annuities hardest as advisors have been told that they will receive 0% upfront fees on those products, and that the fee slashing hasn’t yet come to its end.
The discussion this morning focused on the memo and that JP Morgan is using the BI standard to reduce the payouts for advisors. The JP Morgan advisors that we spoke to simply arent buying it and are convinced that this is just another ploy for the bank to book profits amidst a pandemic, using the blood, sweat, and tears of their advisors to do it.
One advisor had this to say, “You are going from an up front commission of 4% to nothing. Not that variable annuities are the lion share of the product and work that I do, but it will make a dent in my numbers going forward. The bigger issue is that the cutting probably won’t stop here. The rumor is that there is more to come. If they use the BI bullshit to hack away further at what we earn, and you know we have reduced payouts here compared to the wires; people will leave.”
Annuities have remained in the regulatory cross-hairs for essentially a decade. Just ask Ken Fisher, who claims he’d rather die than sell an annuity (he’s got other issues at the moment). Still, they are heavily regulated, legal, and at times tax efficient useful places to stash client funds.
Deciding to cut the payouts on these products without any advance notice is just another slap in the face to the advisor that practices at JP Morgan; whatever channel of theirs you are stationed in. And we suspect that the next few fee cutting announcement from the firm will be met with similar angst.