Genworth Financial plans to aggressively join the retirement services companies that are launching products and units aimed at gathering customers and assets from baby boomers nearing retirement.
"The focus for years around 401(k) plans has been around asset accumulation and how to build better allocation models and better platforms, but all of that is changing," said Fred Conley, who was hired last week to be the president and chief executive officer of Genworth's institutional retirement group. "Right now everyone is focused on moving from accumulation to distribution and finding a product that can make that move seamlessly."
The Richmond, Va., company formed its institutional retirement group in April in tandem with introduction of its ClearCourse variable annuity - a product designed to supply guaranteed income for life and capture upside market potential.
ClearCourse, issued by GE Life and Annuity Assurance Co., a unit of Genworth, lets employees invest in a portfolio of stocks and bonds to pursue returns through asset growth but guarantees a certain amount of lifetime retirement income, regardless of the investments' returns.
Mr. Conley, who was an executive vice president of institutional sales at CitiStreet, said ClearCourse will spearhead substantial growth for both his unit and Genworth in the next five years. It is the only investment vehicle of its kind in the market, he said, and really attracted him to Genworth.
"There are a lot of products that come into the 401(k) space, but this is unique," he said. "This product enables people to move from asset accumulation to asset distribution without changing into a different vehicle."
In the past two years, however, as more retirement services companies have begun to focus on ways to retain aging baby boomers' assets, they too have innovated on the product front.
MassMutual Financial Group announced in July that it had bought a majority interest in Golden Retirement Resources Inc. of New York. The insurer was attracted to Golden by its RetireMentor, a product that uses both funds and annuities to supply clients with income after they retire.
RetireMentor combines the stability of annuities with the investment opportunities available in mutual funds, and MassMutual plans to distribute it to middle-market and mass-affluent baby boomers.
Both RetireMentor and ClearCourse are similar to the Fidelity Income Management Account, which the Boston fund giant unveiled last October as an addition to the Retirement Income Advantage program it introduced in June 2004.
The Fidelity product is designed to help retired investors monitor and manage their retirement income, make more informed investment decisions, and control their spending. It gives customers a single view of all their Fidelity and non-Fidelity accounts and lets them invest in Fidelity accounts.
Jennifer Engle, a spokeswoman at Fidelity, said the company has completed more than 200,000 income plans for customers. Forrester Research said about 20 million U.S. households have people near retirement age who have accumulated $100,000 to $1 million of assets.
Mr. Conley said ClearCourse is unique because, rather than merging annuities and mutual funds on one platform as other products do, it is a single product that "offers guaranteed income for life with upside potential."
Plan sponsors will begin to adopt the product in the next 12 to 18 months, Mr. Conley said he expects. His group is in discussions to distribute it through banks and other financial services companies, he said. The product should really take hold in 2006, 2007, and 2008, he said, and he would then expand the 12-person institutional retirement group.
"We will look to add salespeople in the next couple of weeks and add more professionals as the unit grows," he said.
