Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
If you were a manager with expertise in selling retirement plans, the past 14 months have been very good. So good, in fact, that it was hard to keep up with all the midlevel executive moves within the retirement units of the largest life and annuity carriers.
Many hires were for new positions and other hires were part of the yearly churn endemic in large companies. Either way, it was one big game of musical chairs as insurance carriers and distributors fought for talent in the rapidly expanding retirement services arena.
The post-2008 recession trickle turned into a torrent. MassMutual Retirement Services, for example, announced earlier this month the hiring of five senior managers in one swoop.
Why all the activity? At least the math is easy.
The 30 percent gain in the Standard & Poor’s 500 index meant that a $100,000 retirement account shot up to $130,000, and that was before adding to principal through automatic withdrawals.
Adding another $10,000 in the course of the year boosted that $130,000 account even higher. Someone had to manage all that new money.
Toss in the refrain about how Americans are unprepared or underprepared for retirement, and all the chatter in Congress about making retirement easier and more accessible, and it only means more retirement plan assets to manage.
There are now about 80 million baby boomers in the U.S.
The leading edge of the generation born between 1946 and 1964 turned 65 in 2011. This year they are nearing 70 and that means they are headed for their final exits, not from life – it is difficult to say how many of them will be living for another 30 years – but from the salaried workforce.
All these retirees need income. Even for those retirees who don’t need income right away, there’s a lot of money to invest in such retirement products as fixed annuities, variable annuities, alternative investments and mutual funds.
Low interest rates only add to investors’ appetite for higher yielding returns, which typically come from more complicated investments that carriers need to explain to the wholesalers, retail advisors and broker-dealers who sell them.
In fact, there’s so much money to invest that the Investment Company Institute (ICI), the trade group that tracks the kinds of quantities we’re talking about, measures it in trillions of dollars. Retirement assets reached $21.9 trillion at the end of the third quarter in 2013.
Even without the last quarter of 2013 – which was a very strong quarter – total U.S. retirement assets were running $2 trillion ahead of all of 2012, according to ICI data.
No wonder carriers are hiring retirement plan sales and distribution managers across the retirement segment spectrum, geographies and sales categories.
From retailers to wholesalers, from 401(k)s to 403(b)s, from extending contracts with large state pensions to broadening the huge but fractured private small-business segment, from hiring district managers to bringing on board national sales managers, demand for retirement plan sales and marketing refused to let up.
Any way you slice it, the retirement pipeline is fat and likely to swell even more – assuming markets cooperate.
Personnel hires and promotions, often made one at a time, were loaded with three, four or even five announcements at once.
MassMutual’s Feb. 12 quintet of new hires or promoted veterans included managing director Jason Bouldin, along with regional sales directors John Cunningham, Lauren Drapeau, Jon Ogren and Mary Kay Zoulek, all responsible for different territories.
The news from MassMutual was followed two days later by Lincoln Financial Distributors, which said it had hired corporate retirement plan expert Michele Wyatt, sales and marketing veteran Mathew Abraham, and wirehouse, independent broker/dealer and registered investment advisor (RIA) channel sales expert Thomas O’Connell.
It was a similar story for Great-West Financial, which opened new sales territories in New Jersey and Delaware last summer, and promptly hired regional sales director Kevin Miller to get the operation off the ground.
In an interview with InsuranceNewsNet last month, Howard Diamond, managing director of Diamond Consultants in Chester, N.J., spoke of a talent war among financial advisors and broker/dealers fueled by large recruiting deals and high retention bonuses.
One can’t help but wonder if that kind of hiring frenzy has permeated the midlevel ranks of the large insurance carriers.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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