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Industry Spotlight > Broker Dealers

Finetre Annuity Transaction Volume Doubles

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NU Online News Service, Jan. 26, 2004, 5:39 p.m. EST – Finetre Corp. says annuity transaction volume at its AnnuityNet online service increased 116% in 2003.[@@]

The Herndon, Va., company reports processing more than 357,000 annuity transactions last year, up from fewer than 165,000 transactions in 2002.

Much of the increase involved infusions of “new” money into annuities rather than transfers of funds from one annuity to another through 1035 forms, says Steve Dunlap, Finetre’s vice president of marketing.

“Last year, new money was 91% of our business, so 1035s were significantly lower than anyone had guessed,” Dunlap says.

Dunlap warns that Finetre’s success at attracting new money may not represent the industry average, given that Finetre does not yet have a critical mass in terms of the number of distributors using its technology.

“It’s too new a technology,” he says. “The number of 1035s is going down because many broker-dealers actively discourage their reps from doing 1035 business.”

The reason: broker-dealers are trying to avoid problems with regulators, who may see excessive annuity exchanges as an effort to generate commissions for the broker-dealer.

Dunlap believes the number of online annuity transactions is still just a fraction of what it will be in the near future. He points to growing use in the industry of the processing and clearing system developed by the Depository Trust and Clearing Corp., New York, and the widespread acceptance by insurance carriers of industry electronic trading standards developed in 2002 by the National Association for Variable Annuities, Reston, Va., and the Association for Cooperative Operations Research and Development, Pearl River, N.Y.

“In some respect, the planets are lining up for online annuity trading,” Dunlap says.

Another factor is that online processing simplifies paperwork.

“A broker-dealer doesn’t want its reps to go to [the] Hartford and Manulife and Pacific Life Web sites to do business,” Dunlap explains. “They want one platform where all the information is in place.”

Finetre offers online processing for more than 170 annuity products and plans to sign up 5 new distributors in the first quarter of 2004, Dunlap says.

Finetre, formerly known as AnnuityNet/VARDS, also will be offering 529 college savings plan enrollment, Dunlap says.


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