Message At NAVA: Keep It Simple

Reaching the consumer with that unique product and message requires simplifying language, he said. For example, he said that annuitization is not a word, as indicated by red underscoring in Microsofts Word program. Simpler terms have to be created, he added.

That need for simplicity was reiterated by Mark Tully, a senior vice president-annuity distribution and sales with The Phoenix Cos., Hartford, Conn. As an example, Tully said every company calls benefits by different names and that lack of uniformity makes it more difficult for advisors.

The need for simplicity goes beyond terminology and has to be reflected in product simplicity and presentation, he said.

If there are a variety of riders that advisors can offer, then there needs to be a strong educational effort about when those riders should be used, he said.

The complexity of product features is a concern in the home office because of the risk of suitability issues that could arise, according to Richard Randa, managing director, director of retirement planning services, annuities and IRA marketing with Wachovia Securities, Charlotte, N.C.

To address the suitability of variable annuities and guarantees embedded in them, Wachovia has developed an annuity suitability questionnaire that creates a system that flags both managers and the home office if there is the potential for a suitability problem associated with a VA sale, he explained.

The survey covers potential market timing problems as well as frequent 1035 exchanges within a 5-year period, Randa said.

One reason the questionnaire was created, he added, is that products have become very complicated. In fact, they have become complicated enough for his company to begin centralizing a review of sales in the home office, Randa told attendees. The review looks at items such as a clients age, risk tolerance and the need for money now and in the future, he continued.

The issue of 1035 exchanges can be addressed, at least in part, Randa said, by making products flexible enough so that a client can change a feature in a contract rather than having to direct an advisor to initiate an exchange.

Reproduced from National Underwriter Edition, October 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.