The press will probably continue to point out cost issues related to variable insurance products but will avoid talking about what clients do, emotionally, with their money, predicted James Price here at the annual marketing conference of the National Association for Variable Annuities, Reston, Va.
Even so, the variable insurance industry is in “the best possible position” for growth, said the executive vice president and director of investment and marketing solutions for UBS Financial Services Inc., New York. This is because the industry has the capability of capturing greater control of client assets in a holistic way, Price contended.
Regarding variable annuities, criticism will likely continue concerning the products longer breakeven points (since the last tax reform) in comparison to mutual funds, their exposure to market downturns and other issues, he allowed.
But VAs have many features that help reduce the emotional pressure on clients and keep them focused, Price continued. These include asset allocation, auto rebalancing, tax-free transfer capabilities, guaranteed living and death benefits, and guarantees of principal.
“I think our product will continue to grow,” he said. In fact, “If you dont have variable products in your practice today, its not a wealth management practice.”
Prices speech brought a strong round of applause, reflecting a feisty mood evident throughout the meeting.
The conference was held just a week after news had broken about a Securities and Exchange Commission inquiry into possible market timing problems at some VA insurers. The news reports, plus previous articles questioning VA fee structure, performance and disclosure issues, spurred speakers to defend the VA and variable product industry.
The negative articles about VAs have overlooked all the benefits and guarantees of VAs, said NAVAs chair, Jane Mancini, who is executive vice president of sales and marketing at Rydex Investments, Rockville, Md.
Tax deferral, for example, is a “very powerful tool.” The industry needs to start shifting the focus, she contended. “We need to shift it from what is unfair to what is accurate.”