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Portfolio > Mutual Funds

Prospects Good For VAs In IRA Rollover Market: FRC

By Staff Writer

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NU Online News Service, Oct. 27, 2004, 4:05 p.m. EDT

The IRA market will grow to $4.8 trillion by 2010, not including the $2.1 trillion currently invested in defined contribution plans, says the Financial Research Corp.[@@]

In a new report, FRC, Boston, says many VA providers are already planning to capture their share of that huge market. But they are going to have to contend with a lot of competitors, including providers of separately managed accounts, mutual funds and other packaged financial products.

The best bet is to embrace the competition, FRC says.

“Positioning the VA within the IRA rollover market, however, is not without its challenges, such as duplication of tax deferral and lack of product competitiveness for six-figure rollovers,” FRC says in its new report, “Reaching Out For Rollovers.”

Providers should promote the immediate VA as part of a “holistic” plan that also encompasses a variety of noninsurance products, including mutual funds, SMAs and exchange-traded funds, the company advises.

“The keys to promoting variable annuities in the IRA rollover market are to position them as part of a total financial plan, and to focus on their unique attributes: lifetime income, asset preservation, and beneficiary protection,” advises Lisa Plotnick, vice president and director of variable annuity research at FRC and author of the report.

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