NAVA, the association for insured retirement solutions, is upbeat about the state of the industry’s main initiatives in public relations and regulatory affairs, according to NAVA President and CEO Mark Mackay, who opened the group’s annual marketing conference held February 24-27 at the La Quinta Resort & Club near Palm Springs, Calif.
For instance, the Reston, Va.-based industry group continues to stage successful meetings and follow up work with state regulators in order to improve the ease and transparency of sales, known as straight-through processing (or STP). More than 10 states had approved the process, according to Mackay, who is retiring in October after 12 years with the organization.
In the media, more publications are showcasing positive articles on variable annuities, especially living benefits. This trend should continue if the organization and its members can further educate journalists, Mackay says, and hold one-on-one meetings.
Relations with regulators are “progressing well” as the group focuses on pro-consumer initiatives like STP and its support of a toll-free consumer-protection telephone line. “This is very important. When regulators see us put our house in order, they are less likely to regulate.”
And after some negative publicity of the recent past, “We said we’d respond,” Mackay explains. “And the press agrees. This is paying off with big dividends.”
Mark Casady, president and CEO of LPL Financial and the meeting’s co-chair, says LPL Financial is one of the largest sellers of variable annuities.
He compares the product’s development today to mutual funds some 20 years ago and sees it as a robust source of innovation and wealth protection. “Now it’s a tool for risk transfer. And it used to be for only the super rich, with $100 million. Not today,” he explains.
David Odenath, president of Prudential Annuities and the event’s other co-chair, says the opportunity for industry growth is very promising. “This is what happens when a wonderful client need meets an industry solution,” Odenath explains.
The industry needs to further educate consumers about the solution annuities provide and firmly focus on transparency. “These steps are the core future for this business,” he shares.
Frank Zafran, a managing director with Morgan Stanley’s global wealth management group, says it’s hard for sales to be unsuitable because of regulation. Advisors who have recently joined the firm, he says, have about 2 percent of sales in variable annuities.
“These products can make a difference for clients,” Zafran explains. They represent about 7 percent of the revenue for the broker-dealer, or $4 billion, he says.