Deciding to purchase an annuity

Raymond James^[1] offers clients a wide range of investment alternatives and services including variable, fixed, and fixed index annuity products. Deciding which annuity to purchase can be complex. It is important for you to work with your financial advisor to evaluate how a particular annuity and its features fit your individual needs and objectives. An important component of any annuity screening and selection process includes carefully reading  documents such as the product brochure, contract, or in the case of variable annuities, the product prospectus and the variable annuity investment sub account prospectuses before making a purchase decision. Each document contains important information that will help you make an informed choice. Your financial advisor will gladly provide you with the product brochure or variable annuity product prospectus and literature containing the variable annuity investment sub account prospectuses. Your financial advisor will also answer your questions such as what guarantees are provided by the annuity, optional riders and how variable annuity investment sub accounts are priced, and initial and ongoing compensation your financial advisor and Raymond James may receive.

For a more detailed description of annuities, purchase considerations, and the product related expenses, please visit the Financial Industry Regulatory Authority’s (FINRA) website at http://www.finra.org/investors/annuities.

Compensation received by Raymond James when you purchase an annuity

Some of the compensation paid to Raymond James may be familiar because in the past you have noticed fees or commissions directly charged to your account. Other compensation is paid to Raymond James from third parties like insurance companies who issue annuity contracts. The following is a description of the types of payments Raymond James may receive related to your purchase of an annuity. Feel free to discuss with your financial advisor how he/she is compensated prior to and following your annuity purchase. This document explains in general terms how the compensation arrangements work.

Indirect compensation

Raymond James and its financial advisors receive compensation in the form of commissions from the insurance company for the purchase of an annuity contract and, in most cases, for additional deposits made into the annuity contract. Raymond James may also receive compensation from the insurance company to cover annuity contract servicing expenses (commonly referred to as trails), which are payable as long as the contract remains in effect. Raymond James passes a portion of these trails on to the financial advisor. Upfront and trail commission payments are paid out of the insurance company’s assets, but may be derived from product fees and expenses. For variable annuities, details regarding all fees and expenses, as well as compensation, can be found in the product prospectus. Additional copies of the variable annuity product prospectus and literature containing the variable annuity investment sub-account prospectuses are available through your financial advisor.

Total compensation for annuity contracts (commissions and trails) range from 0% to 7% of the contract value, based on an average 7 year contract lifecycle.  Total compensation may be higher if the contract is held beyond that period. The actual commission amounts vary by insurance company, the type of product, the commission structure selected and, in some cases, the amount of the investment.

Raymond James does not provide cash or non-cash compensation incentives to financial advisors or branch managers for recommending certain annuity contracts or types of annuity contracts. However, insurance companies that promote and issue the annuity contracts may provide various forms of non-cash compensation to Raymond James financial advisors as discussed in the section entitled “Other Compensation paid to Raymond James by Insurance Companies.”

Compensation required for the termination of the relationship, contract or arrangement

Contingent deferred sales charges

As previously described, Raymond James receives a commission from the insurance company issuing your annuity contract. Your financial advisor receives a portion of the annuity commissions paid to Raymond James. The commissions paid by the insurance company are not deducted from your initial or subsequent purchase payments. However, if you surrender your annuity during the surrender charge period as noted in your contract (or product prospectus for variable annuity purchases only), a surrender charge will be deducted from the cash value returned to you.

Contingent deferred sales charge periods, also known as surrender charge periods, vary by annuity contract but typically last from three to ten years. Charges may be assessed on the current contract value or premiums paid into the contract and range from 0% to 10%, depending on the annuity contract and when in the contingent sales charge period the annuity is terminated. The highest percentages generally occur at the beginning of the contingent sales charge period, and the lowest percentages generally occur at the end of the contingent sales charge period.

How your financial advisor receives commissions

The financial advisor typically has a choice of commission options regarding the timing and structure of commissions paid to Raymond James. In most cases, the structure of the commission selected by the financial advisor will have no impact on the annuity contract expenses. Annuity products may offer the following commission options:

-A single, lump sum commission based on purchase amount

-A slightly reduced lump sum commission and asset based trail commissions paid monthly or quarterly during the years the contract remains in force

-A further-reduced lump sum commission and higher asset-based trails paid monthly or quarterly during the number of years the contract remains in force

Other compensation paid to Raymond James by insurance companies

Marketing and support payments

Raymond James provides a variety of marketing and other sales support services to insurance companies related to their annuity products. Raymond James distributes annuities from a number of insurance companies and receives additional compensation from them in the form of sales and asset-based education and marketing support payments. It is not paid directly from the assets of your annuity.

The following schedule provides the level of education and marketing support payments that Raymond James may receive from a particular insurance company or distributor:

-Up to 0.25% on annuity purchases (e.g., $25 for a $10,000 purchase), and

-Up to 0.05% per year on assets

Additionally, no portion of the payments received by Raymond James is paid to or shared directly with your financial advisor or his or her respective branch office. The payments are paid directly from the insurance companies to Raymond James.

The actual amounts that Raymond James may receive will vary from one insurance company to another and investments in certain annuity products and/or investment options may be excluded from the above formulas.

Please see our website for a list of insurance companies that have agreed to participate in Raymond James’ Education and Marketing Supportprogram.

General promotional activities

Marketing representatives of insurance companies or their affiliated distributors, who are often referred to as “wholesalers,” work with Raymond James financial advisors to promote their annuity products. Consistent with applicable laws and regulations, these insurance companies and their wholesalers may pay for or provide training and education programs for Raymond James financial advisors and their existing and prospective clients. Insurance companies may also pay for due diligence meetings, conferences, relationship building events, other occasional activities, and/or provide promotional items that are intended to result in the promotion and sale of their annuity products.

Raymond James has an affiliated entity which acts as a wholesaler for several insurance companies that issue products such as immediate, fixed, and index annuities. This entity may interact not only with Raymond James financial advisors, but also advisors at other broker-dealers or insurance agencies. In cases where this Raymond James entity has facilitated a sale of an annuity, Raymond James may receive up to 2% of the contract value of the annuity as a fee for wholesaling and marketing services.

Conferences

Insurance Companies participate in educational conferences organized or sponsored by Raymond James to provide generalized product information and may pay Raymond James a fee to offset the cost of a conference.

Investors should consider the investment objectives, risks, and charges and expenses of variable annuities carefully before investing. The prospectus contains this and other important information. Prospectuses for both the variable annuity contract and the underlying funds are available from your Raymond James financial advisor and should be read carefully before investing.

Variable Annuities, issued by insurance companies are long-term investment alternatives designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty. An investment in variable annuities involves risk, including possible loss of principal. The contracts, when redeemed, may be worth more or less than the original investment.

[1] Raymond James refers to Raymond James & Associates, Inc, Raymond James Financial Services, Inc and Morgan Keegan & Company, Inc. as applicable.