Phoenix, Jefferson agree to focus on fee-based advisers

The Phoenix Cos. Inc. has formed an alliance with Jefferson National Life Insurance Co. in which Phoenix will use the Jefferson technology platform to offer no-load variable annuities to fee-based advisers at wirehouses and regional broker-dealers.

The annuities take the form of living-benefit riders to Phoenix investment products.

To access Phoenix products, investors are likely to pay a fee similar to the $20-per-month cost — plus mortality-and-expense charges — imposed by Dallas-based Jefferson on its National Monument Advisor product.

“While we have a large footprint in the distribution channel and work with wirehouses, this alliance is an opportunity for us to [tap into] Jefferson National’s understanding of how to reach out to advisers,” said Joseph Fazzino, assistant vice president for corporate communications at Hartford, Conn.-based Phoenix.

David Macchia, president and chief executive of Wealth2K Inc. in Hingham, Mass., called the alliance a “healthy” development in the insurance industry, and a “harbinger of things to come.”

“The registered investment adviser marketplace has a huge demand for this type of product,” he said, citing the impending retirement of millions of baby boomers and an increased awareness among registered investment advisers of the importance of comprehensive retirement planning.

“This kind of arrangement is likely to be duplicated many times as the RIA marketplace evidences more demand for the guarantees that are increasingly important,” Mr. Macchia added.

Assets managed by fee-based and fee-only advisers increased to more than $2.2 trillion in 2006, compared to roughly $1.5 trillion in 2002, according to the 2006 edition of an annual report by Cerulli Associates Inc. of Boston: Quantitative Update: Intermediary Markets.

Tiburon (Calif.) Strategic Advisors LLC has forecast that assets under management in the broad fee-based market will increase by $10 trillion by 2010.

Last month, the National Association of Personal Financial Advisors of Arlington Heights, Ill., announced that it will provide its 1,700 members with Minneapolis-based Hueler Cos. Inc.’s Income Solutions quoting platform, which provides advisers with a tool to assist their clients in purchasing institutionally priced annuities for individual retirement account rollover assets (InvestmentNews, Oct. 1).

“I am encouraged that companies are looking for channels in the fee-only market,” said NAPFA chairman Thomas Orecchio, principal of Greenbaum & Orecchio Inc. of Old Tappan, N.J. “Any headway into product distribution with lower cost structures to the consumer is a step in the right direction.”

Aaron Siegel can be reached at [email protected].