When the dust settled on a tumultuous first quarter, the writing was on the wall for variable annuity issuers: adapt your product or continue to lose market share to safer, cheaper alternatives. According to LIMRA, U.S. variable annuity sales were down 27% compared to the first quarter of 2008. During the same period, fixed annuities outsold variable products by over four billion dollars, rising a startling 78% in contrast to Q1 2008 totals.

The response from firms was emphatic, resulting in sweeping changes to risky product features as well as the discontinuation of numerous VA products. Hit hardest were the popular VA living benefit riders whose gaudy guarantees became unsustainable as the economic downturn intensified. Continue Reading »

Rarely is a mutual fund firm’s website synonymous with the word “entertainment,” so T. Rowe Price has clearly gone against the grain by teaming up with Walt Disney Resorts Online to create the Great Piggy Bank Adventure online game. The new game is a good way for parents to introduce children to basic money management principles, allowing users to select a goal that can be achieved through earning and saving “truffles” (the game’s monetary system) and making wise financial decisions throughout the game’s multiple levels. Goal items include a pet rabbit, an art canvas, a toy helicopter, a tree-fort and a basketball hoop. Continue Reading »

This morning we took the opportunity to drop in on an Ignites webinar called “Social Media’s Role for Mutual Funds.” While the presentation did not focus specifically on the fund industry, it offered a number of useful takeaways for any financial services firm looking to dip their toe into the social media waters. Continue Reading »

Recently, I’ve noticed that a lot of consultants seem to be hosting webinars to help financial advisors understand how to leverage social communities like Twitter and Linked-In to build their businesses. While these webinars might be useful to those who are new to social media, most address only the most basic aspects of these different platforms. Many gloss over the regulatory risk inherent to these tools. I found this somewhat disturbing since many of the financial institutions we’re in contact with have cited FINRA rules as a barrier, if not the barrier, to their adoption of a social media strategy.

On Sunday, Investment News published an interesting article entitled, “A Warning Before You Twitter,” addressing the compliance issues advisors face when participating on these sites. Reiterating many of the same concerns we’ve heard from our clients, the article suggests that, while it may be possible for advisors to use these tools in a responsible and legal fashion, pre-approval requirements make spontaneous communication difficult, which detracts from the value of participation.

That’s not to say that financial institutions can’t benefit from social media - hardly; we presented several success stories in our Social Media report recently. Still, firms must tread carefully, considering the compliance implications every step of the way as they develop and implement their social media strategy. Industry consultants and the firms they serve cannot turn a blind eye to these issues.

Over the past few years, Corporate Insight has received several requests to evaluate the online educational capabilities of retail financial services firms. As a result, we’ve conducted a number of custom research studies on the subject. This year, we even added an entire category to the Brokerage Website Audit devoted to Investor Education to reflect the increasing importance of good education as a competitive differentiator.

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If you’ve been following this blog for a while, you know that Corporate Insight has been monitoring financial services firms and their use of social media for over a year now. In late 2008, we published the industry’s first comprehensive study of the subject, Social Media: Trends and Tactics in the Financial Services Industry. The report looked at the way firms use tools like blogs, communities and forums to engage consumers and provided dozens of recommendations to help financial institutions navigate this new terrain.

One of our findings from the Social Media report was that the mutual fund industry was more conservative about social media than any other segment Corporate Insight tracks. That includes annuity issuers, banks, brokerages and credit card issuers. At the time we published the report, none of the 20 or so fund firms we monitor had experimented with publicly visible blogs or communities, for instance, let alone actively used sites like Facebook and Twitter to reach out to consumers. Well, Vanguard’s recent forays in the space suggest that this situation may finally be changing. Continue Reading »

Recently, I had the privilege of leading a panel discussion at the Mutual Fund Education Alliance (MFEA) e-Commerce summit in Denver. The topic focused on how fund companies can leverage their websites to help advisors during the current economic conditions and I was joined by Philip Parrotta, head of marketing for DWS Investments, and Ted Stauderman, Director, Marketing Services and eCommerce, for Calvert Investments. It was a great discussion and a few themes emerged that are worth sharing.

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We are considering adding Raymond James to our coverage of firms and recently began the account opening process. The following phone exchange shows how one firm is adjusting:

Me: “I am interested in possibly opening an account. Are there any minimum balance requirements?”

Raymond James rep: “Ah, no. Not anymore.”

Me: “A dollar and a half now gets you in the door, huh?”

RJ: “Pretty much.”

Times are hard.

According to an article in the Wall Street Journal, the Obama administration is proposing new taxes for life insurers to the tune of nearly $13 billion over the next ten years. The new taxes would restrict exemptions associated with the purchase of certain insurance products, especially corporate-owned life insurance.

Last week, many of the Nation’s top life insurers were offered access to treasury funds under TARP. Some of the firms applied to TARP several months ago and have since increased capital; therefore they may opt to reject government assistance. While not necessarily related, the timing of the potential tax proposals (falling on the heels of offered assistance) creates an interesting visage.

Having eliminated or scaled back so many benefits and riders already, it will be interesting to see whether or not the fallout from the proposed taxes would target annuity products specifically. Fixed annuity sales have skyrocketed recently as investors and retirees are seeking a conservative retirement vehicle. The proposed tax increases would most likely hurt overall insurance sales; something the insurance industry is likely to fight tooth and nail as it tries to navigate the economic crisis.

Now that Oprah’s Twittering, it may feel like the whole world has suddenly jumped on the Twitter bandwagon. A number of financial services firms, however, have been using Twitter for more than year a now, as a vehicle for both promotion and customer service. We’ve been interviewed on the subject recently by publications as diverse as USA Today and Wall Street & Technology and we discussed it in last year’s Social Media report. Wachovia, one of the first firms we track to establish a Twitter presence, has used Twitter to answer customer questions and, of late, post updates regarding its merger with Wells Fargo.

Up until recently we had not seen any firms using Twitter as an extension of traditional private site functions. This month, however, Zecco announced that customers could now receive account alerts as direct messages through Twitter. Twitter seems like an ideal portal for alerts. Active Twitter users check their accounts throughout the day, both on their computer and on their cell phone, meaning that the chances of them seeing an account alert are high. And for Zecco, a firm that generally attracts younger, computer-savvy customers, the new Twitter alerts allow the firm to integrate its brand and service with a product many of its customers likely use.

Of course, there was more than just Twittering going during a busy April that saw a number of major changes. Continue Reading »