Quilting Bee

Focusing on products and public policy, the industry must continue to be innovators, Schutz said, creating products that span the landscape of retirement risk, are flexible and easy to understand, and are what consumers want. Most of the products available now are siloed, she said, by an annuity, a life insurance, or LTC product and are “not connected.” They are also inflexible, and fail to change with an “individual’s revolving needs.” This is beginning to change however, she said, as manufacturers are developing products that stitch solutions together.

In January, Genworth combined its U.S. retirement and protection divisions into one, which enabled the company to not only show “one face” to distributors, Schutz said during the separate conversation, but to start putting together the long-term care, annuities, managed money, and income products. “We see a ton of opportunities, particularly when you think about stitching together accumulation, income, and healthcare type products.”

Such products include Genworth’s Total Living Coverage, which provides long-term care and life insurance. Genworth plans to release this year a managed money income product which she said will include a “guaranteed income solution overlay on a managed account platform.” Today, she said, “you see a lot of assets on fee-based managed money platforms.” However, “what you don’t have on those platforms is the opportunity for protection [against] your assets running out because of market performance or outliving your money.”

As for public policy, Schutz said it’s imperative for the industry to continue to influence public policy “so that the environment in which we work is conducive to mitigate retirement risk and building our businesses.” Notwithstanding the Social Security and Medicare situation, “there are lots of opportunities [to affect policy] because the focus hasn’t shifted enough to income and healthcare,” she said. The federal government, too, “is uniquely able to increase financial literacy about retirement risk, but education programs haven’t been adequate.” Public policies must be created that encourage individuals to create their own financial security, she continued. Some progress has been made in the Pension Protection Act as well as the Medicaid State Long-Term Care Partnership Program Act of 2005, legislation that passed as part of the Deficit Reduction Act. The legislation became effective in 2006, and encourages individuals to obtainprivate long-term care insurance. “This protects assets equal to a policy’sbenefits,” Schutz said, “and results in fewer people relying on Medicaid.”