Finally, a variable annuity that even a platform rep can love. Advisors have long complained that the complexity of variable annuities and the constantly changing features made them difficult to sell. As a result where bank advisors sold them at all, only Series 7 reps did so for compliance reasons.
But Metlife’s Simple Solutions variable annuity, which launched last July, starts selling through Series 6 licensed platform reps this month. “This is a very compliance-friendly product,” says Marc Vosen, president and chief executive officer of Key Investment Services, who is launching the product through his platform sales force this month. “We hadn’t been offering variable annuities because they had gotten so complicated, and all the products changed so rapidly that it was really overwhelming for the folks selling them.” Other early adopters include U.S. Bancorp, Capital One and Compass Bank.
“For platform reps, it’s an easy entry into variable annuities,” says Rich Koll, national sales manager at third-party marketer Essex, which plans to offer Simple Solutions through its reps. “More complex VA products can be fabulous for more –sophisticated investors, but for a lot of bank customers, simpler can be better.”
Kevin Crowe, managing director of bank channel operations at Metlife adds that Simple Solutions can be a source of income for platform programs while interest rates remain low, making their usual staples, fixed annuities and CDs, less desirable.
The simple solutions variable annuity has a three-page application and a 23-page prospectus, compared with eight-page applications and over 120-page prospectuses for the typical VA. It has only one rider, which offers lifetime income of 5% of the balance for the purchaser, and spouse if desired. Most VAs feature three or more income riders and three or more death-benefit riders, Crowe says. “We organized a focus group of bankers last year in Dallas and they all told us the same thing. They wanted something simple.”
Simple Solutions has only three underlying mutual funds: an American Funds Balanced Allocation Portfolio, an American Funds Moderate Allocation Portfolio and the MetLife Defensive Strategy Portfolio. There is also a BlackRock Money Market Portfolio option. The new product also allows purchasers to capitalize on market increases by locking in the highest market value of the balance on the anniversary of the annuity purchase. It costs about 3%.
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