There appears to be some confusion over exactly how much money is the adviser going to get after getting the pay cut as recommended by the FAIR Panel. Some advisers have asked me these same questions. Frankly speaking, the Panel’s recommendation is not very clear because it uses words that mean different things when used in different context. But after reading a thousand times, the following is my interpretation and I will use a real whole life regular premium insurance product as an example.

The Panel says that the “total commission” for whole life policies has dropped to 130% from 160% in 2002. In this context, I assume ‘total commission’ means the commission that is inclusive of overriding. The industry called this Gross Revenue (GR). I will use GR because it is a familiar term for those under banding scheme. This percentage of 130% is based on annualized premium. For ...