Declaring that insurers let the mutual fund industry take the 401(k) market away from them, the top executive of Oppenheimer Funds Inc. thinks they could botch the market for annuities as well.
“I think they’ll leave this market on the table because that’s what they do,” said John V. Murphy, chairman, president and chief executive officer of Oppenheimer Funds, New York, during a panel of financial executives at last week’s LIMRA meeting. His company is a unit of Massachusetts Mutual Life Insurance Company, Springfield, Mass.
“It’s a failure to execute,” Murphy said, because insurers are “product-focused, not client-focused.”
“If the mutual fund industry comes up with a guaranteed product, they are going to be winners,” warned Robert L. Reid II, president of Wachovia Corp.’s retirement and investment products group, Charlotte, N.C.
Reid thinks that consumers want annuities but need them presented in an understandable way.
“An annuity is not easy to sell,” he said.
Annuity carriers need to be more transparent about their fees and sales charges, commented another panel member, Stephen G. Bodurtha, senior vice president of the private client group of Merrill Lynch and Co. Inc., New York.
“The insurance industry needs to think about unbundling sales charges and asset management fees,” he said of annuity prices. “People want to see how you price the pieces of it.”
Insurance companies are too slow to move and to react to changes in the marketplace, Murphy charged.