The slowdown of accumulation IUL by AG 49 adjustments are right around the corner. Many carriers we have talked with are shifting their accumulation story and focus to the VUL side of the isle. We will start to see many more VULs include IUL-type sub-accounts, which we’ve already seen over the past year. John Hancock just launched a new accumulation VUL and Penn Mutual also. Other carriers like Lincoln, Pacific Life and Nationwide have included indexed sub-account options already, among others. I suspect soon we might see some leveraged indexed sub-account options as that fades away in the straight IUL world. All good things from a broker/dealer standpoint, although, it shuts out the non-registered agents you work with. You’ll be still able to offer them IUL; it will probably just be the less flashy version. But for those agents looking to get securities registered for 2020 or already carry a license, this offers a great opportunity for you to start incorporating the VUL story into your agent meetings.
We don’t anticipate a huge pendulum swing. More like a gradual letting off the IUL gas and shifting some of that growth to VUL for the 2020s. Of course, we are at the whim of the markets, not to mention renewed geopolitical turmoil which can dash any of these trends. Outside of that, if you think about it, these new VUL products with an IUL feature built-in makes sense and offers enhanced customer/agent flexibility. The client can build a portfolio of investments inside the tax-free wrapper, let it accumulate, then shift to an indexed option to protect the downside when their risk tolerance shifts or they want to take income. The protection that type of account offers from sequence of return risk coupled with client withdrawals is fairly obvious. And, unlike straight IUL, if the carrier gets cute by adjusting the caps, participation rates, or any other profitability maintenance lever they can pull, the client isn’t stuck.
At TLG, we want to be able to help you tell the VUL story. On top of that, we’d like to be able to offer any agent you work with a broker/dealer home. That may sound selfish, but there are a lot of advantages to you as the BGA: number one being that they are with a BGA-friendly broker/dealer that will allow you to continue to work with the agent. Many BDs are becoming restrictive, and big boys like Ash and Crump are elbowing their way into the independents for exclusivity. This trend will continue, and it is hard to find a BD that will honor the BGA-to-agent relationship and protect it. Number two would be the monetary enticement through some additional retail comp override or referral fee, either of which would be possible depending on the situation. You know us; we are pretty flexible. If you don’t know us that well yet, you will come to find that out. You can refer any agent to me directly.
The regulatory environment isn’t getting a whole lot easier with Reb BI and NY 187 for 2020, but rest assured, we are gearing up to help you all stay informed and compliant. There will be more to come as the year progresses. Let us know if you’d like me or a member of the TLG team to come to your annual sales meeting(s) and present on a regulation or sales topic.
As this new exciting decade starts, I want to wish all of you wholesale folks happy selling, and please know that we are here to help. We want to continue to support you and your agents’ efforts to conduct business.
Contact Charles Arnold for more information:
Sales & Business Develpment Team Manager