Phoenix Home Life Mutual Insurance Company of Hartford, Conn. announced to its variable annuity and variable universal life policyholders in its Sept. 1 prospectus, that the board of directors of the Phoenix-Schafer Mid-Cap Value Series had voted to remove the portfolio's sub-adviser.

Schafer Capital Management of Jupiter, Fla., which manages a total of $670 million, was being terminated as the portfolio's sub-adviser effective Sept. 30, the prospectus said. The board voted to replace Schafer with Sanford C. Bernstein of New York, soon to be a unit of Alliance Capital Management of New York. Bernstein currently manages $81 billion in assets. It is scheduled to assume its sub-advisory position Sept. 30. There was no reason given for dismissing the current sub-adviser.

The Phoenix-Schafer Mid-Cap Value Series is one of 23 variable annuity and variable life sub-accounts that Phoenix offers policyholders under its Phoenix Edge Series Trust. Among the offerings are sub-accounts managed by both proprietary, autonomous investment managers that Phoenix has acquired, such as Roger Engemann of San Francisco, and by high-profile outside investment managers such as Bankers Trust of New York, Janus Capital of Denver, Federated Investors of Pittsburgh and Morgan Stanley of New York. Schafer Capital, a niche value fund manager, is also an outside sub-adviser.

Each of the Phoenix Edge sub-advisers is visible since each sub-account carries both Phoenix's and the sub-adviser's name. For example, Janus Capital is the day-to-day manager of the Phoenix-Janus Growth Series and Federated is the adviser to the Phoenix-Federated U.S. Government Bond Series.

But with Schafer's imminent termination as investment sub-adviser on the mid-cap value portfolio, Phoenix is left with a marketing quandary.

Does it delete Schafer's name and rename the portfolio to capitalize on the Bernstein name? Or does Phoenix simply delete any reference to a sub-adviser, and run the risk of losing the attention of investors who may have been captivated by the promise of a widely-recognized investment manager overseeing their assets? If it decides to use its name alone on the portfolio, will Phoenix have to do the same for its other sub-accounts?

Phoenix announced in a prospectus amendment filed Sept. 8 that it would be renaming the fund the "Phoenix-Sanford Bernstein Mid-Cap Value Series."

Industry executives cite the increasing importance of variable product sponsors' reliance on some of the largest, most well-respected investment managers to lend credibility to their products and make marketing those products easier.

Just how important has it become to have a big name manager on sub-account?

"I think it's extremely important," said Marty Swanson, director of marketing for Hartford Life in Simsbury, Conn. Swanson cited the three management partners it enlisted - American Funds of Los Angeles, Franklin Templeton of San Mateo, Calif. and MFS of Boston - last year when it launched its Hartford Leaders variable annuity.

"Brand recognition has been key to our success, especially with brokers," said Swanson. "Having proven money managers in your product is very important."

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