They are the 10 people who make up Senior Market Advisor’s inaugural “Who’s Who in Annuities” list.
All of them have made a significant impact in the annuity market. They represent the people whose accomplishments and contributions make the industry work – and in one case, have to work harder.
In undertaking this project, the staff at Senior Market Advisor enlisted the help of several industry leaders, who made plenty of insightful recommendations as to who has earned the distinction of being on this list. We have predictably selected some industry icons, but have also selected some wild cards who for one reason or another merit inclusion due to the positive — and in one case negative — influence their efforts have had on the market.
Certainly, plenty of worthy industry players are not on the list. That would still be the case if we picked 20 instead of 10. But the 10 we have here have good stories to tell, and we are confident next year will allow us the opportunity to share more stories of industry leaders who are making a difference.
The architect: Richard Kado
When Senior Market Advisor first contacted Richard Kado, vice president of Mississauga, Ont.-based Genesis Financial Products Inc., to inform him of his selection to this list, Kado expressed some surprise. He considers himself a “behind the scenes” influence in the industry, and “the people that need him know where to find him.”
When we found the married father of three (with five grandchildren), he was on his snowboard in Kamloops, B.C., spending time at his counterbalance to work.
Kado has been working in the insurance industry in some form or another for more than 30 years — everything from working in the field as an agent to working in the home office to running a broker/dealer. Eighteen years ago, Marc Verrier and Kado founded Genesis, a research and development company focusing on new annuity products for the U.S. marketplace. “During my tenure at Genesis, I am proud to say that I have been involved in the development of products that have greatly impacted the insurance industry,” Kado says.
In early 1992, a distributor approached Genesis to see if they could find a way to develop a product that would combine the strong guarantees of a fixed annuity with the upside opportunities of variable annuities. “Over the next two years, our research and development efforts led to the creation of a new crediting method that made the equity indexed annuity possible,” Kado says. “Over $100 billion in fixed index annuity sales later, I’m pleased to say that the crediting method used in those original product designs are still very much in use today.”
Kado says the success of Genesis over the long haul has been the result of a straightforward business model. “First, we make it our business to partner with the best distributors — the individuals that understand the market and can help us shape designs that work for all stakeholders (e.g., client, agent, distributor, carrier, and regulator),” Kado says.
“Second, our focus is developing new and better products. Because Genesis is an independent product development company, our approach to the development process is not carrier-centric, freeing us to ‘think outside the box’ and focus purely on concept and innovative design. Once the heavy lifting on the research and development of the new design is complete and we’ve satisfied ourselves that the design is solid, then — and only then — do we approach an insurance company.”
What does the future of product design hold? “We see the future of crediting methods evolving toward designs that maximize the upside potential in today’s economic environment. I see a shift away from frequent automatic stock index resets — like the annual ratchet product — towards more efficient products that reset less frequently, offer greater earnings potential and ultimately provide more choices for the consumer.”
The Suit: Dave Noble
The 1995 retirement of Dave Noble lasted all of four days. Countless people are much better off that the rocking chair wasn’t for him.
Noble saw the opportunity to start a company that focused on a specific market segment: Fixed and equity indexed annuities. During his brief retirement, he wrote the business plan that would become the blueprint for American Equity. The 75-year-old Noble remains very active today as chairman and CEO of the company he founded back in 1995 after “retiring” from an already distinguished career as an insurance industry executive.
Turns out his best days in the industry were ahead of him. He has become a true industry icon.
“I am most proud of what we have accomplished here at American Equity,” Noble says. “This management team has built a $15 billion company from scratch, and with just more than a decade of operation, American Equity is the No. 2 all-time producer of index annuities.”
He also said he is extremely proud of the company’s record of service for customers and agents. “From our inception, we have been innovators and creators when it comes to making annuities better and more effective for policyholders,” Noble says. “We rank at the top of our field for asset quality. And, we have led the way in market conduct and suitability testing and review. In every way that we touch our key audiences… we have worked hard to set the standards for excellence.”
Noble and several members of American Equity’s management today were on the team that developed the very first index annuity in the world. “We believed then and we know now that this financial product serves a significant need for a growing market of individuals who desire financial security, a predictable income source and tax preference without incurring the risk or exposure of capital loss,” Noble says. “In addition, these products offer the ability to take advantage a portion of the gains in the equity or bond markets without risking principal. We saw the Dow Jones Index as one of, if not the most, recognizable financial brands in the world, and we decided to develop a product that was indexed to the Dow Jones performance. The concept was considered quite bold, audacious even at the time. It required an incredible effort from our senior management team working with the management of Dow Jones, and took more than a year and half to bring to market. When we debuted the Dow Jones product, we were given a three-month exclusive. Today, it’s a staple of the industry and every index annuity writer has a Dow Jones product.”
And the rocking chair is still not in the plans. “In my mind, we still have a lot we want to accomplish, especially if we want to remain among the best in our field,” Noble says. “As long as I can make a difference, I’ll be here.”
The Advocate: Mike Tripses
The annuity industry is constantly faced with overcoming bad press from the mainstream financial media, often spreading misinformation to the masses. Be glad we have someone like Mike Tripses, FSA, MAAA, FLMI, who is frequently on hand to set the record straight. While he has been an innovator in product design, he is at heart an educator and advocate for fixed and fixed indexed annuities.
“Honestly, my biggest thrill is the impact I’ve had in educating many audiences, including thousands of agents, industry groups and readers of financial press about the realistic value proposition of indexed interest in a fixed annuity and simple explanations of product structure. This is a product type appropriate for much of graying America,” Tripses says.
Tripses moves from Chairman of the National Association of Fixed Annuities to Chair Emeritus this year. He says he’ll definitely need the reduced duties as he has assumed responsibilities of president for his firm, Creative Marketing International Corporation, a billion-dollar annuity and life wholesaling marketing firm with a large fixed indexed product emphasis.
“My primary challenge is leading the great team at CMIC to the $2 billion mark for a core of high quality insurance companies, which provide high value, consumer-friendly products,” Tripses says.
Tripses has also been an advocate that equity indexed annuities (which NAFA refers to as fixed index annuities) are insurance products and not securities. “The position I’ve staked out since I first concentrated on the annuity product 17 years ago as a chief actuary has not changed. It is based on education about and advocacy for the fixed annuity, a financial product which provides safety, security, interest guarantees, guaranteed income for life, tax-deferral, tax-preferred distribution and true liquidity. I’m pleased this approach is very much in line with continuing regulatory developments in the areas of suitable sales, disclosure and transparency to the consumer. I’m very grateful for the opportunity to chair the board of NAFA in this momentous year where so much attention has been focused on these products by media, regulators and agents. My personal mission of education as well as NAFA’s has been fulfilled with our development of the definitive white paper on Fixed Indexed Products, which we unveiled at the National Press Club [in January].”
From a product development standpoint, Tripses says, “I’ve always been proud of working with staff to independently inaugurate one of the first fixed indexed annuities. I also feel good about innovating the idea of additive capped point to point in a fixed annuity. Lightning strike ideas don’t come about all that often, at least to me. Designing FIAs for numerous insurance companies to the tune of $13 billion in sales in a fledgling industry has been gratifying.”
The Regulator: Susan Voss
When the NASD sent its infamous Notice to Members 05-50 in August 2005, it set off a firestorm of debate as to whether EIAs should be regulated as insurance products or securities. Iowa Insurance Commissioner Susan Voss and the National Association of Insurance Commissioners have since taken a lead role in developing initiatives to strengthen model regulations for fixed indexed annuities in the areas of suitability, marketing materials, and agent training.
“In late 2005 we noticed that equity indexed annuities, as they were known at that time, were getting a lot of bad press and that the NASD, the SEC and the state securities administrators were stating that these products should be treated as securities. We also noted that five of the top 10 indexed annuity companies were located in Iowa (33 percent of the premium in 2004). We met with the Iowa companies and worked with them to develop plans to solve issues that were being raised about the products. We noted that Allianz, a Minnesota company, had a 33 percent market share, so we asked the Minnesota Insurance Department and Allianz to work with us in developing the program.
“We used the A and D Committees of the NAIC as the springboard to obtain wide support from regulators and industry backing the NAIC Suitability and Disclosure Model Acts. We worked with IMSA to develop best practices in this area for all annuities. We continue to work with the NAIC, IMSA and the industry to promote as much uniformity in the suitability and disclosure areas as much as possible.”
Personally, Voss says there are many reasons why FIAs are insurance products and should be regulated as such and not as securities. “The main reason is that any risk of loss is on the company, not the investor. The principal is guaranteed, minimum interest is guaranteed, the companies are subject to all the insurance rules concerning advertising, replacement, nonforfeiture and investment, etc.,” Voss says. “Because of the guarantees they provide as insurance products that securities can’t, regulating them as securities would be harmful to the industry and deprive consumers of a product that many consumers have purchased for over 10 years now.”
The regulation of marketing of products could greatly affect the solvency of a company, Voss notes. “The regulation must stay in the hands of the regulator, who has the responsibility to oversee the solvency of a company. This is much different than is the case with variable annuities with their separate accounts that are segregated from the general accounts of the companies.”
Voss, who has been with the Iowa Insurance Division since 1993 and has served as commissioner since 2005, noted her bottom line is to protect consumers. “That not only means protecting them from unsuitable sales and products, but also means having strong solvent companies with an incentive to develop new products for the growing retirement market.”
The Professor: Jack Marrion
For the few readers out there who may not know of him, Jack Marrion is president of St. Louis-based Advantage Compendium, which provides research and consulting services to select financial companies.
The company publishes the Index Compendium newsletter and the Advantage Sales & Market Report. Marrion’s research has been featured in hundreds of publications and he is a frequent speaker at industry functions. As a reflection of his place in the industry, the National Association of Insurance Commissioners asked Marrion to address its 2006 meeting and teach regulators the realities of index annuities.
Prior to forming Advantage Compendium, Marrion was president and owner of an NASD broker/dealer with offices in nine states, and formerly vice president of a life insurance company and vice president of an NYSE investment banking firm. He has an MBA from the University of Missouri and has completed doctoral studies in organizational theory.
He is the author of four books on financial topics, including the industry standard “Index Annuities — Power & Protection.” Neither Jack Marrion nor Advantage Compendium sell or endorse any financial product.
“I would say that my most significant contribution to the annuity market is my ‘Advantage Index Sales & Market Report.’ This quarterly report has tracked the sales and products of all index annuity carriers since inception of the product line,” Marrion says. “This has established a baseline for all carriers to benchmark their sales to, as well as a source for their product development.”
Marrion also provides a monthly newsletter on indexed life and annuity issues. “I have also been told that this is a valuable resource to many. The ‘Index Compendium’ newsletter provides commentary on issues relevant to the indexed annuity industry, as well as monthly returns for various crediting methods. My partner, Sheryl Moore, provides updates on index life and annuity product launches in her insert, ‘Moore Market Intelligence.’ We also provide sales and rank information on a quarterly basis in the publication.
Marrion has also penned the monthly “Annuity Advisor” column for Senior Market Advisor since July 2005.
Marrion says the annuity industry is currently going through a transition phase. “New product innovations such as Guaranteed Lifetime Withdrawal Benefits (GLWBs) will help to increase not only sales, but awareness of the product line to the boomer generation.”