VAs Finding Need To Innovate In A Changing Retirement Landscape

Most people “don’t manage their own 401(k)s, not even people in the mutual fund industry,” Mancini observed. And the traditional approach of putting mutual funds in the Morningstar grid and then leaving it alone is not sufficient. Many are “astonishingly” over-allocated in small cap and large cap growth, she said, adding: “It’s scary; they go where the names are; they don’t understand.”

Also at the meeting, Catherine Weatherford, the new CEO of NAVA Inc., urged the annuity industry to attack problems caused by today’s economic storms rather than just “hunkering down and waiting it out.”

Weatherford proposed a 3-point action plan for the industry.

First, she said, make it clear to the public that policyholder investments in annuities are safe and sound.

Second, focus more than ever on customer service and policyholder protection, she said, “letting the investing public know that we’re acting on their behalf.”

Third, she proposed creating a new “consumer confidence task force” through NAVA. The purpose of the task force would be to “develop an action plan for navigating through this climate,” she said, adding that this task force would work not only with NAVA’s own public relations and regulatory affairs committees but also with regulators and the public.

Weatherford has regulatory roots herself. She spent 12 years as executive vice president and CEO of the National Association of Insurance Commissioners, Kansas City, Mo., and served a 4-year term as Oklahoma insurance commissioner starting in 1991. In August 2008, she joined NAVA as president and CEO, succeeding Mark Mackey, who retired after 10 years.

This was Weatherford’s first formal address to the association. “NAVA,” she said, “won’t sit by, wringing our hands and let events happen to us. We will attack the problem.”

NAVA’s top officers carried that message forward.

“This industry can go in one of 2 directions,” said outgoing chairman Clifford Jack, who is executive vice president and chief distribution officer of Jackson National Life, Lansing, Mich. “The industry can do what it has done in the past, or it can become a lot more aggressive.”

The annuity companies have the right product at the right time, Jack continued, “but we need to simplify our products and message, and we need your help.”

Incoming NAVA Chairman Mark Casady, the chairman and CEO of LPL Financial Services, San Diego, Calif., said the speed of change in the financial services industry has been “remarkable.”

For example, the country no longer has investment banks, Casady said. “Now, all (banks in the United States) are commercial banks, and it happened in just 2 weeks.”

So, “the trends are accelerating,” Casady continued. This increases the speed required (or companies) to get information and to process information.

Where annuities are concerned, consumers want unbiased advice, he said, and the industry should expect more acceleration here too.

“It’s tough for all of us to watch” the problems in the banking industry and the related developments, Casady allowed. “But it is important for us to get behind whatever the new normal will be.”

In this vein, he said the NAVA board has agreed that the association will be more aggressive about consumer protection issues and promoting the work NAVA members do in providing annuities to clients.