Chad Tope is one of the top distribution managers responsible for trying to get Americans to protect themselves against death and retirement income risk.
Tope is president of annuities and individual life distribution at Voya Financial, the company created when the effects of the Great Recession forced ING Groep N.V. to give up control over its U.S. operations.
Voya ranked 16th in the United States in terms of life insurance direct written premium revenue in 2016, with $2.7 billion in life premium revenue that year, according to market share data from the National Association of Insurance Commissioners.
Voya ranked fifth in the U.S. annuity market, with $14 billion in annuity considerations, according to the NAIC data.
Tope helps make all of that revenue happen by working with in-house and independent wholesalers to try to put the right products in the hands of the right retail agents and advisors. His role gives him a bird's eye view of how the market works, or doesn't work.
Here's a sampling of the thoughts he shared last week when he came by the offices of ThinkAdvisor Life/Health for an interview.
1. The DOL fiduciary rule
Just a few months ago, Voya and other life insurers were still operating on the assumption that the U.S. Department of Labor would implement its fiduciary rule, and the many accompanying batches of guidance, on schedule.
Now, the department appears to be on track to formally delay implementation of the rule, and, possibly, to kill or revise the rule.
Tope is still taking a cautious approach to talking about the future of the rule.
"We don't have full clarity on the rule yet," Tope said.
Tope said many of the changes Voya, other insurers and distributors made in response to completion of the rule are still in place.
Broker-dealers began adding indexed annuities to their shelves in response to how the rule might affected indexed annuities, and the broker-dealers are keeping those products on their shelves, Tope said.
The increased focus on a holistic approach to working with clients is also still there, Tope said.
Advisors are trying to "provide solutions, rather than just pushing products," Tope said. "I think everyone is acting in the best interests of the client."
But Tope said that, so far, the idea that the fiduciary rule would force all financial professionals to rush toward a fee-based compensation model has been incorrect.
"We're also still seeing there's a place for commission-based annuities," Tope said.
Although fee-based variable annuities and fixed annuities have been making headlines this year, they still account for less than 2% of the market, Tope said.
The Great Recession terrified many consumers, and regulators, and it increased the popularity of asset classes that appeared to offer the holders the highest possible level of safety. Retirement savers, in particular, were willing to give up wild dreams of inflation-beating returns in exchange for assurances that they would get their principal back.
In recent years, retirement savers have given up a little asset liquidity in exchange for an opportunity to collect higher returns, by flocking to indexed annuities.
Tope said he now sees signs that retirement savers are willing to move a little further down the risk/reward path, by buying buffer annuities.
A buffer annuity gives consumers some protection against a market drop. A buffer annuity issuer might, for example, promise to shield the holder against a 10% market index drop. If, however, a severe market drop blows through the buffer, the holder will have to eat any additional losses.
In exchange for accepting post-buffer market downturn risk, the buffer holder gets to keep more of the gains if the market index, or indices, at the heart of the annuity does well.
Voya is getting ready to launch the Voya Ascend Annuity contract, a contract that will offer buffer levels ranging from 5% to 30%.
Tope noted that sales of buffer annuities have grown to about $9 billion per year this year, from $2 billion per year in 2014.
"It's the fastest-growing market," Tope said.
3. Hot markets
Overall U.S. life and annuity sales have been soft throughout the United States for about a year.
Voya, however, has been happy with the results from multicultural marketing programs, and especially with the results from efforts to sell financial services products to Asian American consumers in New York, Los Angeles and San Francisco.
Those efforts have been so successful that the company is introducing a Mandarin Chinese version of its name pronounced wò yǎ, and expressed in Chinese characters, Tope said.
Tope said he wishes he saw more life insurance agents of all kinds coming into the market.
"We don't have a lot of feeder groups," Tope said.
But the multicultural market channel has been producing a healthy number of new agents, and that's a positive, Tope said.
— Read ING’s Tope: ‘We’ve Always Had a Very Strong Indexed Annuity Business’ on ThinkAdvisor.