Some clients say, “My annuity has come due,” or “My annuity has matured,” noted Richard Randa during a panel here. But that is not what the annuity is for, declared the director of retirement plan services, annuities and IRA marketing for Wachovia Securities, Richmond, Va.
Going forward, “if we see a lot of 1035s [from L-share annuities] at the end of 3 years, well raise the surrender period to 4 or 5 years. Were not going to mess around.”
The comment came during a panel discussion on L-share variable annuities at the annual meeting of the National Association for Variable Annuities, Reston, Va.
This panel, plus one on mutual funds and separately managed accounts (SMAs), revealed a distinct investor trend: Although many investors have retreated from traditional equity investing during the past 3-plus years, some have been open to investing in less traditional productslike L-share VAs and SMAs.
For example, L-share sales, as a percentage of nongroup VA sales and assets under management have grown steadily from 1999 through the 2nd quarter of 2003, said panel moderator Frank OConnor, director of research and analysis at Finetre Corporation, Herdon, Va., (formerly AnnuityNet/VARDS).
Exchange traded funds and hedge funds also have seen substantial increases in assets, said Thomas W. Keffer, senior vice president-product management, at Oppenheimer Funds, New York, in another panel.
The same is true for various types of fee-based products such as SMAs, multi-disciplined accounts (MDAs), and “custom style portfolios,” said James Vitalie, executive vice president for Curian Capital, LLC, Denver, Colo.
The landscape is continuing to change, noted Greg Gloeckner, moderator of the alternative product panel and vice president of business development at Curian Capital.
Mutual funds are adding new features, SMAs are evolving, and technology is a driving force in distribution and competition, Gloeckner said.
To stay competitive in this environment, he said, the insurance industry must stay aware of the trends.
Todays investment choices dont reflect “just another rise and fall in the market,” maintained Keffer. “We believe investors now are fundamentally more risk averse.”
Many investors no longer are thinking about how great the capital markets are, he continued. Now, they are “less likely to go it alone in picking stocks, more cost conscious and more distrustful.”
In this climate, Keffer said, advisors need to spend more time relationship building and managing that relationship.
As for products, he said principal protected equity funds, asset allocation funds of funds, dividend yield funds and inflation protection funds are gaining popularity in the traditional mutual fund arena.
In the alternative arena, exchange traded funds and hedge funds are on the rise.