Hartford Financial Services Group Inc. is working on several products to help baby boomers plan for retirement income, says John Diehl, a vice president in the insurer’s retirement solutions group.
The products in development would address concerns such as balancing the need for long-term income with the ability to tap cash value for emergencies, Mr. Diehl said.
At one end of the product spectrum, mutual funds and certificates of deposit give account holders ready access to their underlying assets, he said; at the other, “immediate” annuities provide lifetime income but no control over the asset.
“I think the new products will really look at that space in between,” said Mr. Diehl, whose company is the top variable annuity seller both overall and through banks.
Additional products are intended to satisfy boomers’ preferences as they approach retirement, he said. They may want to “front-load” or “back-load” their disbursements, he said, and concerns that range from paying for nursing home care to transferring wealth could all prompt new products.
Simsbury, Conn.-based Hartford has already been busy with new products and product features aimed at retirement-minded baby boomers. Its Income Security annuity, announced in March, is designed to ensure a steady income stream no matter how long its owner lives.
And it is now offering employers its Hartford Lifetime Income annuity, which fits within 401(k) plans to give participants a guaranteed retirement income stream to go along with their stock and bond investments.
“We’re trying to get people to diversify in the income stage as well as the accumulation stage,” Mr. Diehl said.
The insurer’s “income builder” feature, introduced last November, guarantees variable annuity customers the return of their principal, and a stream of income that cannot be outlived. And it is possible, he said, that the guaranteed lifetime income concept being incorporated in annuities could be applied to mutual funds as well.
Early this year, Hartford tapped a 15-person team of financial planning experts to train wholesalers and advisers on retirement income issues, and it plans to raise the team’s membership to 20.
“We want to help people accumulate assets — and then make them last,” said Mr. Diehl.
The insurer has been positioning itself to serve baby boomer retirees in a number of ways. Last year, for example, it announced that it would begin adding an optional lifetime income guarantee to nearly all its investment products.
This spring it introduced its “Prepare to Live” television and print marketing campaign targeting boomers. And last week, it promoted Rob Arena, Jim Davey, and Ken McCullum to senior vice president, bolstering its retirement initiative.
Mr. Arena directs product management for individual annuities, mutual funds, 529 accounts, and Canadian retail businesses. Mr. Davey directs the retirement plans group, covering 401(k), 457, and 403(b) businesses. And Mr. McCullum oversees product development, pricing, and underwriting for the institutional investment products business.
The company is not pinning its hopes just on annuities, where it has excelled. Mr. Diehl said he sees an opportunity to expand the 401(k) business by catering to the fast-growing small-business segment and to mature people who have put off retirement in order to sock away more savings.
“Boomers, especially, carry the expectation that they may work longer,” he said. “They may work to age 70, and many of them are still interested in saving for retirement.”
Mr. Diehl said he is tired of hearing that Americans are ill-prepared financially for retirement.
“At some point people kind of get beaten into submission and say, ‘If this is a lost cause, why don’t I head in with what I’ve got,’ ” he said. “You have to have the confidence to at least embrace the process” of preparing for retirement.
Hartford is focusing far ahead — on the tens of millions of baby boomers who will enter the 55-to-64 age bracket by 2020. As they near retirement, the banks, brokerages, and independent broker-dealers that sell Hartford’s products increasingly want to take a comprehensive approach to these customers’ needs, Mr. Diehl said.
“Our distributor partners are moving from product-oriented sales efforts more into retirement-oriented approaches,” he said.
At the end of March, Hartford reported having $109 billion of variable annuity assets, $32 billion in mutual funds, and $21 billion of retirement plan assets.
