MassMutual Financial Group is “leaning toward” selling financial products into retirement accounts through broker-dealers to satisfy new Department of Labor fiduciary rules.
Companies are busy deciding how to sell popular products such as fixed indexed annuities under the new DOL rules, which start taking effect in April. Analysts say banks and broker-dealers could take business away from independent agents as companies seek the best channels to limit their liability.
Meanwhile, MassMutual is developing a new fixed indexed annuity with MetLife, the first such product for the company. The annuity could be sold in partnership with Brighthouse Financial, which MetLife is about to spin off as a separate company, a MassMutual executive said.
The new FIA is expected to launch this year or next, said John Vaccaro, CEO of MML Investors Services, MassMutual’s broker-dealer, in an interview with InsuranceNewsNet.
“We didn’t have a fixed indexed annuity in the product portfolio so that’s why we developed it,” he said.
Retirement investors like FIAs because investors can’t lose their principal when markets decline, but can potentially earn more than they would in a savings account or CD when markets do well.
With FIA sales booming, many insurance companies have crowded into the segment over the past several years, bombarding agents with dozens of products in all sorts of flavors.
The FIA market is projected to balloon to $60 billion in contract values by the end of this year. But the inclusion of FIAs in the DOL rule's restrictive Best Interest Contract Exemption has analysts speculating on the future of the product.
But MassMutual’s entry is noteworthy because of its recent purchase of 3,833 financial advisors from MetLife.
The acquisition of the MetLife agents brings the total number of career-affiliated advisors in the MassMutual Financial Network to about 9,200.
For the time being, MML Investors Services and MSI Financial Services, MetLife’s broker-dealer and registered investment advisor, will continue as two separate distributors under the MassMutual fold, Vaccaro said.
MassMutual acquired MSI Financial Services along with the 3,833 retail advisors in a transaction that was first announced in February.
The sale of MetLife’s advisors and the separation of the majority of its retail business into Brighthouse Financial into a separate company is part of MetLife’s strategy to cut $1 billion in expenses by the end of 2019.
By getting out of the retail distribution business, MetLife will be able to develop or “manufacture” life and retirement products instead of worrying about how to sell them.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]
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