[quote=Borker Boy]I’ve mentioned this tactic before, and a few people referred to it as annuity arbitrage, but that’s not what it is. It’s more along the lines of actively managing annuities.

  The way it works is for an agent to sell an annuity with an upfront bonus. Two years later, the agent annuitizes the contract and either sends the proceeds to the client (if they're in need of funds) or opens another annuity with a bonus. The agent makes certain that he does not exceed $100K in any contract, and after several years, the client will own numerous annuities.   By utilizing this method, contract periods and surrender fees are irrelevant. The money is going to be moved penalty-free after two years and the client retains the bonus. The agent gets paid every time he moves the money, and the guys in my town are making a killing doing this. They were audited by the SEC a while back and were told by the auditors that they'd never seen anyone doing this but were impressed with the concept.   Of course, if the insurance companies realize you're getting in just to get the bonus and then bailing, they'll drop you.   Has anyone else heard of this method of managing annuities?[/quote]   I believe that you have also mentioned that in your state, contracts must be able to be annuitized after two year 2?  Am I remembering this correctly?  Specific rules in your state may make this possible.  There was a broker in Michigan who was pyramiding annuities a couple years back, heavy hitter.  6 figure fine and barred for life.  The one concern I would have about this strategy, wouldn't this lead to an indefinite surrender period?

…and here I thought you were talking about woving between various sub-accounts…

  I'm not going to knock a strategy without adequately understanding it, but I prefer something much simpler.  I use L-share annuities, get 3-4% up front and 1% a year thereafter.  I spend a fair amount of time initially profiling the client and looking at the various carriers for the annuity and riders that best match client goals.  Some are better for building a legacy and others are stronger for providing current income.  Still others do a solid job on both counts.  I then allocate the subaccounts and spend some time with the client before signing the app forms, making sure they understand what they have.  I then schedule annual reviews, servicing the contract and make subaccount changes as needed.  That pay structure not only matches the timing of my efforts, it also puts annuities in line with my fee-based business.   Without knowing more about the nuts and bolts of the strategy you've outlined, my guess is that the insurance companies will become wise to this strategy and eventually close that loop-hole, which makes me nervous about implenting such a strategy.  Sometimes we get too cute for our own good.