Driving better portfolio outcomes with annuities

InsuranceNewsNet Publisher Paul Feldman interviewed Igor Zamkovsky, head of Indexed Annuities, Retirement Insurance at BlackRock, at the recent NAFA Annuity Leadership Forum. They discussed the role that annuities can play providing guaranteed income during retirement, especially in an uncertain economy, and the value BlackRock sees in annuities during the decumulation period.

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Interview Transcript:

Paul Feldman:

Hello, everyone, this is Paul Feldman, Insurance News Net. I'm here with Igor Zamkovsky. He's with BlackRock. Igor, tell us a little bit about yourself and your role with BlackRock.

Igor Zamkovsky:

Absolutely. So thank you so much for having me today. So I'm a part of the retirement group at BlackRock where I lead our efforts in the indexed annuity space, and I've been here for about five years. I came to it through a financial services background, working both in asset management at an investment bank beforehand, and it's just been an incredible opportunity to work at this firm in a team that's really focused not only on delivering great solutions to our clients, but really delivering great solutions for retirement.

Feldman:

Tell me what BlackRock's doing in the industry.

Zamkovsky:

Absolutely. So BlackRock, as the world's largest asset manager, certainly has a lot of different things going on, but what I focus on is the indexed annuity space and partnering with our insurance clients. As an asset manager, we always start with the markets first, so currently, our house view is that there's going to be a lot of volatility for longer. We're going to be living with elevated inflation, and certainly things like nearshoring of supply chains, it's going to lead to a lot of uncertainty. And when you think about the topic of retirement, volatility, uncertainty, these are not great things. So certainly, what the insurance industry is doing and to do with concepts like guaranteed income, unprotected accumulation is absolutely critical. The one thing I would say on top of that is philosophically, BlackRock always thinks about the total portfolio. So it's not about how do you use an insurance product annuity as a standalone basis? How do you use it as a part of a holistic total portfolio to drive better outcomes? And that's something that we spend a lot of time thinking about.

Feldman:

Which is really interesting, too, that a company like yours thinks that annuity should be part of it.  A lot of people on Wall Street don't think that way.

Zamkovsky:

And again, annuities, a guaranteed lifetime income, right? Social security being the classic annuity in mind, but we have a deep commitment to the retirement income space in many ways. We certainly partner with a lot of top insurance companies. There's also efforts in the in-plan space where BlackRock's a big player in the 401(k) space, but overall, guaranteed lifetime income is something that's so important. And as I was saying, in this world of increased volatility and uncertainty, solutions like that are more than ever. And again, you mentioned the word annuities have different connotations, but we unequivocally believe that guaranteed lifetime income is something that's incredibly additive to American savers.

And actually, BlackRock recently launched a paper with the bipartisan policy center looking at the use of guaranteed income and retirement. And what we've actually found, when adding guaranteed income to traditional retirement saver, when combined with a more aggressive asset allocation, can substantially increase income on retirement, have that income last longer, and further protect the downside. If combined with an optimal social security strategy, potentially delaying claiming for a little bit, that could benefit even further.

So certainly on the thought leadership side, on topics like guaranteed income, again, be it delivered in plan or out of plan, on topics like protected accumulation and fixed annuities such as the ones that NAFA has worked so much on promoting, when used appropriately with a solid product design within a holistic portfolio framework, we think there's a lot of value. And again, as we said at the start, in a world of higher volatility, higher uncertainty, and an advisory community that's really, really good at investing, helping clients how to grow their money, how to allocate to stocks and bonds, but not so much time historically has been spent on that decumulation phase. And what we certainly are very clear on is that decumulation phase is more important than ever and you can't set it and forget it. You can't do what you've always done because what we do know is the next 10 years won't look like the last 10 years.

Feldman:

No.

Zamkovsky:

From that perspective, we at BlackRock are certainly committed, both on the product side, both in plan and out of plan, as well as very critically, thought leadership and using some of those insights from our asset management and bringing our asset management expertise to figure out how we can build better retirement decumulation portfolios in a time where this will certainly be very beneficial to US investors.

And then thinking about our role in this space, we oftentimes provide the growth engines, the investments, the indices, the ETFs and so on to the space. And philosophically, the way we approach it is very simple. We're here for the long term. We like doing things that are simple, transparent, leveraging some of the best insights from around the firm, and really with that philosophy of doing things for the long term. Oftentimes, we use iShares ETFs that US retail knows and loves, and again, making sure that a lot of insurance products look and feel like what US retail is using outside of the annuity part of their portfolios.

Feldman:

What's next for BlackRock in this space?

Zamkovsky:

First off,, we're certainly going to keep doing what we're doing, and with insurance, insurance touches so many parts of BlackRock across our general account business, our Aladdin technology that is so widely used by the insurance community, certainly inside of the annuity space, as well as now in plan. On the in plan side, BlackRock has a solution called Life Path Paycheck and Market where we're seeing a lot of interest. And on the out of plan side, on the traditional distribution, we continue to partner with our clients in the variable space, but increasingly in the FIA space and the RILA space and the index universal life space to bring some of those solutions from BlackRock to market using the philosophy I described. Again, as mentioned, simple, transparent, for the long term, bringing the best of BlackRock's investment insights, oftentimes leveraging iShares ETFs and ensuring that these portfolios for retirement that are so critical are built with the best tools possible.

Feldman:

Igor, thank you so much for your time.

Zamkovsky:

Thank you so much for your time, and see you at the next NAFA.

Feldman:

Absolutely.

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