Annuities

• What is an Annuity?
• Types of Annuities
• Benefits
  • Annuity Living Benefits
  • Beneficiary Protection
  • No Contribution Limits
• Asset Allocation
• Is it Appropriate for Me?
• Why Start Saving Now?
  • Dollar Cost Averaging
  • Income Taxes
• Frequently Asked Questions

Morgan Stanley Smith Barney offers clients a selection of variable annuities from approved insurance-company families or providers. We review and evaluate each provider, whose products we offer based upon various factors, including but not limited to:

Evaluating providers in this manner allows us to focus marketing and sales-support resources on the providers of greatest interest to, and that offer the most competitive and suitable products for, our clients and their Financial Advisors. Financial Advisors are not permitted to recommend investments in products from providers that have not been reviewed, evaluated and approved.

Revenue Sharing

For the variable-annuity products offered, Morgan Stanley Smith Barney seeks to collect from insurance companies a revenue sharing payment. In 2010, providers paid fees on assets of up to 0.25% per year ($25 per $10,000), calculated quarterly, based upon the aggregate value of variable-annuity assets (including assets invested in fixed-rate accounts within variable annuities) invested in contracts for which Morgan Stanley Smith Barney is designated as the broker/ dealer or agent of record. This rate may be subject to volume discounting (that is, as the number of assets increases, the basis-point payment for those assets will decrease). It is also important to note that Financial Advisors receive absolutely no additional compensation as a result of these revenue-sharing payments.

Commissions and Service Fees

Each time a variable annuity is purchased through a Morgan Stanley Smith Barney Financial Advisor, the provider pays Morgan Stanley Smith Barney compensation, in the form of a commission, based upon the product and share class selected and the amount of the client investment. Morgan Stanley Smith Barney, in turn, pays a portion of the commission to the Financial Advisor. Financial Advisor commissions generally range from 0% to 5% of contributions and trails (annuity contract servicing payments) from 0.25% to 1.60% of variable annuity assets. Morgan Stanley Smith Barney passes all or a portion of these trails on to the Financial Advisor. Insurance companies also pay Morgan Stanley Smith Barney an additional percentage of contributions generally not exceeding .80%. Upfront and trail commission payments are paid out of the insurance companies' assets, but derived from the product fees and expenses described in the prospectus.

Expense Reimbursements

Morgan Stanley Smith Barney may seek prepayment or reimbursement by approved providers, their parent or affiliated companies, or other service providers for the expenses we incur for various sales meetings, seminars and conferences held in the normal course of business.

Compensation From Providers

Morgan Stanley Smith Barney, and its parent or affiliates receive, from certain approved providers or their parent or affiliated companies compensation in the form of commissions and other fees for providing traditional brokerage services, including related research and advisory support, and for purchases and sales of securities for their own portfolios or the portfolios of subaccount investment companies. They also receive other compensation from certain approved providers or their parent or affiliated companies, for financial services performed for the benefit of such companies. Morgan Stanley Smith Barney prohibits linking the determination of the amount of such brokerage commissions and service fees charged to an approved provider or its parent or affiliated company to the aggregate values of our overall variable product sales or client holdings of these products or to offset the revenue-sharing or expense reimbursements described above.

Morgan Stanley Smith Barney's relationship with the funds offered in Variable Annuities

The variable annuities offered through Morgan Stanley Smith Barney include funds managed by Morgan Stanley & Co. LLC and its affiliates as well as funds managed by independent money managers. Morgan Stanley & Co. LLC, as a firm, earns management fees if you choose to invest in the Morgan Stanley & Co. LLC funds available within a variable annuity. However, our Financial Advisors receive the same commissions and trails regardless of the variable insurance funds you pick.

For More Information

For additional information on a particular provider's payment and compensation practices, please refer to the provider's product Prospectus and Statement of Additional Information. For further information regarding the fees and expenses borne by you and how your advisor is compensated when you purchase variable annuities, please refer to “Understanding Variable Annuities” (PDF)