By John Hilton
April 5, 2019
BALTIMORE --
Raymond James Insurance Group executives spend a lot of time in meetings
sorting through issues related to commission-based sales.
While the
Department of Labor fiduciary rule is gone, tossed out by a federal appeals
court one year ago, the compliance spotlight it shone on commission annuity
sales remains.
"At every one
of these meetings, we say 'You know if we were just 100 percent advisory we
wouldn't even be having this discussion,'" said Scott Stolz, president of
Raymond James Insurance Group.
Stolz was part of a
final-day panel titled "Distribution Speaks" at the 2019 Retirement
Industry Conference.
Raymond James has
about $62 billion worth of annuities on the books, Stolz said, and
advisor-based sales are growing, but slowly. The advisory side accounts for
about 15 percent of sales, with variable annuities leading the way, he said.
The panel agreed
that advisory compensation systems will some day win out.
"There's going
to be a day where we say 'You are making this decision for us,'" Stolz
said.
If the industry
doesn't figure out how to effectively provide distribution of annuities via
advisory channels, "sales are just going to fall off a cliff," Stolz
said.
"We need to
provide guaranteed-income products to clients who prefer advisory
solutions," agreed Greg Jaeck, senior product leader at Edward Jones.
If efforts are
successful, annuity sales could double, or even triple, he added.
The session was
moderated by Christine Tucker, vice president of marketing for Pacific Life.
She began with these two slides:
Retail annuity sales are
shifting #retireconf
More stats on shifting
annuity sales. #retireconf
Annuity sales
rebounded strongly in 2018, and the panelists said that trend is expected to
continue in 2019. The ill-fated Department of Labor fiduciary rule had a big
impact on the annuity sales dip, Jaeck said.
"The DOL
impacted us quite a bit," he said. "We shut down sales twice in 2017.
That doesn't help sales numbers at all."
Edward Jones
expects to hit $4.5 billion in sales this year, up from $3.2 billion in 2017.
However, the
annuity sales rebound is favoring accumulation products over income. Tucker
questioned whether that is the best move for clients and how income annuities
can sell better.
"Advisors
don't like to sell DIAs and SPIAs because lets face it, it makes the assets go
away," Stolz said of income annuities. "The message we're trying to
get through to advisors is if you handle the income ... investing the rest gets
so much easier."
'Incredible Amount Of Work'
Speaking of the
manufacturing, panelists said the annuity designs are often too complex to
manage. In some cases, nobody at the insurer even has any familiarity with a
particular annuity option.
"It's an
incredible amount of work to manage these riders appropriately," Stolz
said. "We have trouble getting advisors to turn on the income. ... The
first insurance company that can help is with this and make it easier to manage
the block ... would be greatly appreciated."
Jaeck agreed, adding
that each carrier "is in a different place" with technology.
"Even just starting a rider. Some provide forms, while some don't do
forms."
While carriers keep
rolling out new annuity designs, Stolz isn't sure they need to.
"If it were up
to me, I would not vote for anything new. I've got too many products as it
is," he said. "Most of the time, we conclude that it's really not
that different. It's just repackaging the same thing."
InsuranceNewsNet
Senior Editor John Hilton has covered business and other beats in more than 20
years of daily journalism. John may be reached at john.hilton@innfeedback.com.
Follow him on Twitter @INNJohnH.
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