Jackson National Life is bringing alternative investments to the masses. The company, based in Lansing, Mich., announced Monday that it has launched Elite Access, a new investment vehicle designed to provide greater portfolio diversification through the use of alternative asset classes. Elite Access combines three core elements–alternative investments, risk management and tactical management to address market volatility and the potential for higher returns with less risk.
“Coming out of the economic crisis, advisors and clients were rightly asking if there was a better way [to minimize risk and achieve returns],” says Clifford Jack (left), head of retail for Jackson. “Pensions and endowments seemed to get it right, so advisors were looking to replicate what they did in order to reduce volatility and increase performance. As a result, they are more likely to consider counter-correlation products that decrease risk; something other than simply traditional stocks and bonds.”
The issue, according to Jack, is the low adoption rate of alternative investments by advisors and clients, one that is driven by a lack of access to alternative asset classes.
“Access is difficult to come by,” he says. “Access to the best alt managers is critical to success in the space, so in a sense Elite Access is a democratization of alternatives.”
The product is structured as an annuity, but only in the sense that it provides the benefit of tax deferral, according to Jackson spokesman Andrew Silver.
“We’re really not positioning Elite Access to go up against other products in the $150 billion annuity industry,” Silver says. “We're still talking to our core annuity producers, but we're also broadening our focus and positioning Elite Access against products in the far larger asset management industry as a whole.”
According to the company, Elite Access features “a wide range of investment options and philosophies, all optimized through the benefits of tax deferral.”
Individual investment options include:
- Alternative investments: Twelve options, including managed futures, commodities, listed private equity, global infrastructure, convertible arbitrage and emerging markets debt that provide enhanced diversification potential;
- Traditional investments: Options from well-known, reputable active managers such as American Funds, Franklin Templeton, J.P. Morgan and T. Rowe Price that span across investment styles.
A frequent criticism from advisors about alternative investments is that they did not, as a whole, perform to expectations during the height of the economic crisis, with managed futures the only alternative asset class that lived up to its “non-correlated” tag.
“The next change in the market cycle won’t be the same as the last,” Jack says, when asked if this criticism was considered in the design of Elite Access. “We don’t want to simply show a back test. We want to broaden the non-correlated investment options to further protect on the market downside while allowing investors to participate on the upside.”
Jack said advisor education in alternative investments will be crucial to their clients’ success. To further that aim, Jackson will hold 100 road shows for advisors across the country. There is also a host of educational and marketing material related to the product available from the company, in addition to multimedia presentations on its website.
“We’ve provided nine months of training on the subject for our wholesaling staff,” he concludes. “Each wholesaler has also had to acquire the Certified Fund Specialist designation to ensure they’re experts on the subject.”