Craig Hawley (Photo: Nationwide)
1. A decline in stress about the Labor Department's fiduciary rule
2. Rising interest rates
3. The growing popularity of structured annuities and other 'hybrids'
4. Artificial intelligence
5. Clients' shift toward the legacy planning stage of life
Here are 5 factors that might shape Craig Hawley’s job this year.
For more of our annuity market coverage, see our Annuity Market Archive.
Craig Hawley could be complaining about federal regulators’ on-and-off-again efforts to set annuity sales standards.
Hawley runs Nationwide Advisory Solutions — the Nationwide Mutual Insurance Company subsidiary formerly known as Jefferson National. Jefferson National. Jefferson National has been courting fee-based advisors with commission-free variable annuities since 2008, before the fiduciary rule was a gleam in U.S. Department of Labor officials’ eyes.
In theory, strict enforcement of the Labor Department’s rule could have been good for sales of commission-free variable annuities.
But, in an interview on Monday, Hawley avoided either celebrating, or mourning, the death of the Labor Department’s fiduciary rule. Instead, Hawley pointed out that his unit’s sales increased 33% last year, and are on track to increase more than 40% this year.
“We think the industry has pivoted,” Hawley said.
Whatever happens in Washington, consumers still want transparency, and they still want a holistic approach to financial planning, Hawley said. Advisors’ response to what consumers want has been, and should continue to be, great for an organization that was designed from ground up to serve RIAs and fee-based advisors, Hawley said.
Nationwide Advisory Solutions
Nationwide Advisory Solutions runs what amounts to a tax-deferred investing system, with about 400 investment options on the menu.
The unit has relationships with about 5,000 financial advisors.
About 70% of the relationships are with fee-only registered investment advisors.
About 30% are with advisors who have relationships with broker-dealers, and a mix of fee-based and commission-based business.
The unit is adding about 800 to 1,000 relationships each year.
Hawley, who played basketball at the University of Louisville, has a bachelor’s degree and a law degree from that university.
He began working for Jefferson National as the company’s deputy general counsel in 2000. He he became the company’s general counsel in 2002.
What Craig Hawley Said
Here are five highlights from the Hawley interview.
1. Hawley said Nationwide is a great corporate parent to have.
Nationwide is a great parent because it and Jefferson National have similar corporate cultures, but Nationwide’s advertising doesn’t hurt, Hawley said.
“You can probably sing the jingle,” Hawley said. “Everyone can sing the jingle.”
2. Hawley is hoping independent financial services professionals will solve the young-professional pipeline problem themselves.
Years ago, training programs for commission-based career agents helped keep the pipeline full.
In March 2017, a survey organized by Celent hinted at the possibility that, at least in the health insurance market, there might now be many more agents over the age of 75 than under the age of 35.
Hawley said he thinks the problem is simply that many young people do not realize that becoming a financial advisor is a career choice they could make.
Young people will probably solve the problem by telling each other about the opportunities that are available, Hawley said.
3. Hawley said technology could help the financial professional pipeline problem.
One obstacle for new RIAs is building a big enough book of business to keep a practice going, Hawley said.
Hawley said he believes that artificial intelligence advice systems will be a tool new RIAs can use to start their practices, rather than something that will crowd out new RIAs.
New RIAs can use the AI systems to attract clients with smaller asset levels and grow along with the clients’ assets, Hawley said.
4. Hawley said he thinks the annuity market really does look better.
While the Labor Department’s fiduciary rule story was evolving, “the industry hunkered down a little bit,” Hawley said.
Now, the regulatory environment is a bit more settled, interest rates are increasing insurers’ investment earnings, and hybrid products that bridge the gap between the indexed annuity market and the variable annuity market, such as structured annuities, are getting to be more popular, Hawley said.
5. Hawley said he thinks time will lead to an evolution in the practices of advisors who now focus on retirement planning.
Advisors have been focusing on helping clients accumulate assets, and now are helping retiring clients structure retirement income, Hawley said.
Hawley said he’s hearing more from advisors these days about helping income planning clients with the next phase: legacy planning.
Nationwide Advisory Solutions is getting ready to roll out new products, and some will be aimed at the clients in the legacy planning phase, Hawley said.
— Read Advisors See Clients Benefiting From Tax Reform; Clients Not So Sure on ThinkAdvisor.