A new organization of insurance and asset management firms is hopeful that the SEC’s proposed Regulation Best Interest will include a provision mandating discussion of risk, according to Jackson National Life Insurance CEO Barry Stowe.
The language would require advisors to “be mindful of and communicate to the consumer” how exposed they are “to market risk and to longevity risk,” Stowe said. “Candidly, just about the only product in existence that mitigates those two risks is some form of an annuity product.”
He spoke Oct. 4 at a panel of insurance CEOs who are part of the Alliance for Lifetime Income, a research, marketing and educational organization launched this year. The insurance industry is “massively supportive of a heightened standard” for quality and conflict-free advice, Stowe says.
The backing for the Reg BI proposal in the wake of
The new organization aims to help advisors and clients meet the income challenges posed by longevity, and annuity
“The workings of how these products do what they do can be complex. And that needs to be fully disclosed and fully discussed,” said Stephen Pelletier, the COO of Prudential’s U.S. business. “But what really also needs to be addressed is the benefits. And the benefits are not so complex.”
He added that annuities are “the only solutions that combine growth potential, downside protection and a guaranteed income stream.”
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While the IBD advocacy organization supports the proposal’s approach, key questions loom over the timeline and makeup of the potential regulation.
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Revenue from FIAs surged to well over the existing mark in the second quarter, while VAs stabilized after 17 straight quarterly declines.
August 24 -
Allianz became the second multinational insurance firm to step away from the IBD space this year under a plan to shutter Questar Capital.
October 11
The largest firms’ combined VA and FA revenues hit a three-year low in 2017, but the products still make up a significant portion of their businesses.
Only about 38% of U.S. households have an annuity or pension addressing their lifetime income needs, according to the organization. It has tapped eight research fellows, including two former officials in President Obama’s administration, to study retirement income, security and longevity.
By the end of the year, the organization will release a tool for advisors and clients to assess their readiness, in the form of a score between 0 and 850, according to Seth Harris, a fellow who served as acting secretary and deputy secretary of the Labor Department under the previous administration.
The organization, which also counts MassMutual, Invesco, Allianz, AIG, Nationwide, Lincoln Financial Group and Capital Group as members, is a 501(c)(6) nonprofit formally known as a business league, which
Its activities so far have included research reports, television advertisements and virtual reality games on everyday risks and retirement income planning. The Alliance set up the virtual reality booths in New York’s Times Square after the event.
The organization’s efforts will focus on education, according to Jana Greer, CEO of AIG’s retirement unit.
The public doesn’t yet have enough knowledge about how annuities can serve as a kind of anchor in a portion of their portfolios to provide “protected guaranteed monthly lifetime income that is going to last for the rest of your life, no matter what,” Greer said.
“What we’re asking is that people learn more about their income needs, what they will be and then think about that anchor, which for us we believe is annuities, because they’re guaranteed,” she said.
Two members of the new group own a pair of the largest independent broker-dealers in MassMutual’s MML Investors and the Lincoln Financial Network. Jackson, on the other hand, sold the assets of its IBD network
Allianz also announced it would shutter its IBD, Questar Capital,
They recovered in 2017, though their combined disclosed annuity sales declined
“The decision behind selling our broker-dealer was that it was just no longer a core business for us, and we felt like we ought to be totally focused on manufacturing solutions,” Stowe said.
