Ask an Expert - Annuities

Ask An Annuity Expert By:

David Longfritz
SVP & General Manager
John Hancock Financial Services
Retirement Income & Rollover Solutions
601 Congress St
Boston, MA 02110
Phone: (617) 663-3782
Fax: (617) 663-2297
Web: http://www.jhannuities.com

As head of Retirement Income & Rollover Solutions, David Longfritz focuses on developing integrated lifetime retirement solutions for individuals through products and services offered by John Hancock Wealth Management. Previously, Mr. Longfritz was VP & Chief Marketing Officer for the Hancock/Manulife variable annuity businesses. Prior to joining Manulife Wood Logan in 2000, he was a retail broker with Merrill Lynch for seven years and a packaged goods specialist at Procter & Gamble. David graduated from the University of Maine with a B.A. in Political Science and earned an M.B.A. in Marketing from the University of Connecticut.
Q: What are the different types of retirement income “annuity” products that could be offered to participants through their employer’s retirement plan and to individuals on a retail basis?

LONGFRITZ: 

When discussing retirement income products, it is important to distinguish between all retirement income products and “guaranteed” retirement income products. Retirement income products include a myriad of investment vehicles, including mutual funds, dividend paying stocks, bonds and even CD’s. However, it is important to note that guaranteed retirement income products are only offered by insurance companies.

The guaranteed retirement income products offered on a retail basis by insurance companies include immediate, fixed and variable annuities. According to recently released trade research, approximately two thirds of the individual annuities sold today offer some type of guaranteed income rider. Harnessing the evolution of these retail products, guaranteed retirement income products are now being offered to retirement plans on a group basis. The products are just starting to develop and the insurance companies are using several different approaches. Some of the new group products are teamed with optional guaranteed retirement income riders that provide the same features and benefits of the Guaranteed Minimum Withdrawal Benefit offered in retail variable annuities. Conversely, other riders are based on fixed annuity technology where the participant buys “income units” with each contribution. Another variation of the guaranteed retirement income rider is offered as a distribution option only. The pricing is equally diverse, ranging from a computation built into the spread to an annual rider charge as high as 0.95%. The guarantees are backed by the claims-paying ability of the issuing insurer. Availability may vary by product and state. Additional fees, restrictions and limitations may apply. See prospectus for full details.

John Hancock Financial Services is a unit of Manulife Financial Corporation, a leading Canadian-based financial services group. Operating through John Hancock in the United States, the company offers a diverse range of financial protection products and wealth management services through an extensive network of employees, agents and distribution partners. Already a leader in variable annuities, mutual funds and 401(k) products, John Hancock has formed a new Retirement Income & Rollover Solutions division. This business unit was specifically designed to create solutions that assist individuals achieve their lifetime retirement income goals. John Hancock Retirement Plan Services, a sister company with over 40,000 401(k) plans, ranks among industry leaders in the small to mid-sized market for employer sponsored retirement plans. The company distributes group retirement plan products through a specialized & highly skilled wholesaler force, TPAs and financial representatives. Its best-in-class service to both plan sponsors and participants (2006 Chatham Client Satisfaction Survey) is matched by its best in class pre & post-sale support to advisors (2007 Financial Advisor Magazine ratings).

The purpose of this Q&A forum is to provide general educational information exclusive to the trade. We do not warrant and are not responsible for the accuracy of content, errors or omissions. David cannot give advice regarding actual matters. Only hypothetical questions seeking general information can be answered. Questions that involve real people or real matters cannot be answered. The opinions expressed in this Q&A do not necessarily reflect the views of the CFDD. Feedback may be sent to: CFDD@The CFDD.com