What is a commission?

A commission on a 403(b) product is a fee paid to an insurance agent or advisor/broker when you purchase a 403(b)/457 product, such as a fixed or variable annuity, an index annuity or a mutual fund.

The commission is typically a percentage of the amount you invest or the amount of the transaction, and it is designed to compensate the insurance agent or advisor/broker for their services.

It's important to be aware of the commission structure for any 403(b) product you're considering, as it can affect the overall cost of your investment. Some products may have upfront commissions, while others may have ongoing commissions or fees that are charged periodically, such as annually.

While commissions can be a legitimate way for investment providers and advisors to earn a living, they can also create conflicts of interest if the advisor is incentivized to recommend products that are not in your best interest. For this reason, it's important to carefully evaluate any investment products or advisors you're considering and to be aware of the potential costs and risks associated with your investments.