Insurance companies are scoping out new distribution channels for variable annuities. Managed-money programs and 401(k) plans top the list of targets.
Seeking a wider audience for variable annuities, insurance company executives today said they're seeking to distribute them through such new channels as managed-money programs and 401(k) plans.
“We need the right packaging and to do business the way they do,” said Steven R. Mabry, senior vice president of annuities marketing at Axa Equitable Life Insurance Co. He spoke on a panel at the Insured Retirement Institute's marketing conference in New York today.
The financial crisis has led carriers to rethink the way they want to tackle potential customers and reach out to advisers. For some, that means selling through new distribution routes.
“The concept of equity investment and lifetime guarantees is universal,” Mr. Mabry added. “We're focused on going out there for [registered investment advisers], managed-money programs and other non-traditional distribution.”
Mr. Mabry said that it was a mistake for insurers to try churning variable annuity sales volume through the use of 1035 exchanges. Instead, he explained, the trillions of dollars in managed-money platforms would make a better potential market.
For ING, the new audience will be the producers who are fairly new to selling variable annuities, but the carrier would also like to maintain its retirement rollover business.
“We're still catering to the individual retail market,” said panelist Michael Katz, head of variable annuity product development at ING U.S. Financial Services. The carrier has a registered fixed-annuity product with a guarantee for its most conservative investors but also has a variable annuity. The insurer will be releasing such a product next month. It's a simplified product with a full cost of 225 basis points — one that Mr. Katz said the company “hopes will appeal to the non-variable-annuity producers.”
Products don't take off without the necessary support for distribution, noted Robert Grubka, vice president of retirement solutions products at Lincoln Financial Group. “We can build all sorts of products, but it needs to come with top-down support from the distribution standpoint, and some firms are further along than others,” he said.
Lincoln Financial also has a new product on the drawing board for release this fall, combining a long-term-care rider with a fixed annuity and a variable annuity, Mr. Grubka said. The addition allows Lincoln to hit a product space that isn't already crowded with competitors.
“Long-term care and annuities are ways to strike out a different turf, and there are a lot less people there,” he said. “From a company perspective, it's important not to lose sight of what we have to do to compete and how you can do it differently.”
