NAVA Panel Sees So Many VAs, So Much Confusion
Rancho Mirage, Calif.
Variable product sellers should strive to keep their marketing messages and products simple, said Larry Sullivan, president of Legg Mason Financial Services, Baltimore, Md.
“Dont confuse people,” he urged executives here at a marketing conference of National Association for Variable Annuities, Reston, Va.
“Promote (the things that) financial advisors are comfortable promoting,” Sullivan continued. “That is, promote the VAs professional asset management, tax deferral, and basic death benefit guarantees.”
Insurers that go the other way and promote lots of features and options create time-consuming work and confusion for producers, he contended.
“Do we want the big producers spending their time looking at spreadsheets” in order to be able to sell the products? he asked rhetorically.
No, Sullivan said, “were into basics, not Ouija boards.”
He was speaking at a panel on how VA product proliferation is affecting VA sales. The mood among the speakers was definitively on the side of “deal with it or suffer.”
“Were fooling ourselves,” declared panel moderator Matthew Sharpe, in referring to long-held notions that product proliferation will help companies grow their books of business.
If the industrys product proliferation goes on much longer as it has, he predicted, “the value of each of our franchises will decline.”
Sharpe, the vice president of business development for GE Financial Assurance Company in Richmond, Va., recalled that product innovations in the VA business started multiplying in the 1980s. But he said the decade of the 1990s was when carriers really began making “all kinds of tweaks” to the products and creating the multiplicity of products that exist today.
The result is that carriers have been “fighting” with each other over smaller and smaller space, to the point that its difficult for companies to grow market share and many are dealing with negative new money flows, Sharpe said.
“Somewhere, weve forgotten what we are all about,” he asserted.
The industry needs to concentrate on new product development, not tweaking products it already has, he continued. It also needs to attract new producers for its products, and to uncover new consumer needs that it can meet, he said.