Improvements to Education, Suitability, and Sales Training seen as key to supporting advisors, improving distribution
New York, May 18, 2005 � New Web-based strategies will be critical in supporting future sales of variable annuity (VA) products, according to a whitepaper just released by kasina, a leading financial services industry consulting firm. The report, �Improving Variable Annuity Distribution through Online Initiatives,� recommends that insurance companies and asset managers focus their efforts on enhancing online tools in three broad areas: Education, Suitability, and Sales Training.
�There has been a lot of controversy in the industry over the last few years regarding variable annuity products,� said Sean Carroll, consultant at kasina. �At least part of this seems to stem from a lack of understanding on the part of advisors as to how a variable annuity works and who is a suitable customer. These are issues that can be addressed effectively through online education, support, and sales tools.�
In conducting its study, kasina reviewed more than 30 industry-leading Web sites from among the largest insurance and sub-advisory firms, according to their variable annuity sales. Additionally, kasina conducted an online survey of e-Business and Marketing managers from these firms. Based on this research, kasina concluded that many sites today continue to assume a higher level of variable annuity understanding among the advisors selling the products than is often warranted. The firm concludes that asset managers should move to strengthen their sites by adding:
Depth of Content, including a clear explanation of what a variable annuity is and how it works, discussion of specific product features like the death benefit, and a detail description of investment objectives;
Explanation of fees, with a feature-by-feature breakdown on investor costs; and,
Comparison to other products, including those with similar retirement objectives such as 401(k)s, IRAs, and other types of annuities.
The role of the insurance or asset management firm
The kasina report points out that in 2003, the NASD received more than 7,000 complaints about variable annuities, with suitability and fees among the factors most often likely to result in dissatisfied investors. Its analysis found that offline, firms have placed a much greater emphasis on suitability, but have yet to replicate that in their online offerings. In fact, of the sites reviewed, only a handful provided any level of Web-based suitability testing.
kasina notes that with variable annuity sales and marketing practices being closely scrutinized by regulators, firms should not assume that they have no role to play in the education process. While the primary responsibility may fall to distribution partners, insurance companies and asset managers can both help support the image of VA products in the marketplace and improve their own distribution by providing online access to a broader range of tools that help the intermediary better understand both the products and the sales process.
“For the right investor, variable annuities can be a great product, but they can create a big challenge for the agent or advisor who must determine suitability, explain how an annuity works, and detail the fees and charges that are involved. In each instance, there is an important role for the insurer or asset manager to play in providing the tools to help the intermediary make an appropriate sale,� said Carroll.
kasina is a management consulting firm that is focused on helping financial services companies create intelligent relationships with their investors and intermediaries. By combining knowledge of distribution trends, technological innovations, and marketing strategies, kasina aids leading asset management firms with front-office efforts and publishes a regular schedule of cutting-edge industry research. kasina�s client list includes 18 of the 20 largest asset managers in the United States and leading firms in Canada, France, Germany, and the United Kingdom. An overview of services offered by kasina is available at www.kasina.com.