Hartford Financial Services Group Inc. says it plans to expand distribution and sales by going after the ultra-wealthy.
John A. Vaccaro, the Hartford Life unit’s chief marketing officer, said in an interview Tuesday that the company is starting a private wealth management services group to offer products and services through financial company partners to people with more than $10 million of assets.
Mr. Vaccaro said insurance products have always been an option for the ultra-wealthy but that this is Hartford Life’s first active marketing campaign to this client segment.
“The Hartford’s strength has always been to know where the puck is going and be there ahead of time,” he said. “We got into wire houses before anyone else on the life insurance side. We got into the bank market before our competitors did. We believe this is the next frontier. We believe this is the next opportunity.”
Hartford began a pilot test of the program this month through some of its wholesalers. Mr. Vaccaro said the unit will be launched nationally in September when the company begins going after ultra-wealthy customers with 20 of its 208 wholesalers.
The insurer plans to distribute to ultra-wealthy customers through private banks, trust departments, and multifamily offices, he said, and it hopes to build on the success it has had on the retail side. The possibility exists to develop assets through its existing customers and specifically through the bank channel, he said.
“Banks want to grow their insurance business from all sides,” Mr. Vaccaro said. “We’ve had success with them on the retail side, and we want to build off of that.”
Some analysts were skeptical about how successful a company, even one as large as Hartford Life, can be in selling insurance to the ultra-wealthy.
“Most banks and most insurance companies focus on selling their products to retail customers because it is an easier sale,” said Kevin Daniels, a Boston analyst. “Most insurance products and annuities are built for these types of [retail] investors.”
Ken Kehrer, the president of Kenneth Kehrer Associates Inc. in Princeton, N.J., disagreed. Some of the best success banks have had in selling life insurance has been to wealthy people and business owners, he said, because these customers focus on estate tax planning, business succession, and other issues to which life insurance can be apropos.
“Most banks have had a difficult time recruiting and retaining agents who can work with ultra-wealthy clients,” he said. “Some banks like JPMorgan, BB&T, and Wachovia have had success, but the problem that these institutions have had is that they really can’t get enough quality agents to come work for them. … So most banks want to work with a firm like The Hartford to provide resources and [to] partner to reach these customers.”
Mr. Kehrer said Hartford Life has been successful already with banks and with wealthy customers in the channel. The Kehrer firm, which tracks insurance and investment product sales through banks, says Hartford had the second-highest life insurance sales in the channel last year, at $20.9 million, up 29% from 2003. It was second only to Nationwide Financial, which had $22.8 million of sales, up 9%.
“The Hartford is continuing to close the gap” with Nationwide, he said.
Mr. Vaccaro said the private wealth management services group would work with brokers and other client advisers to help determine how insurance can be employed in an ultra-wealthy person’s portfolio. The group will offer products including key man insurance, succession planning, life insurance, private placement variable life insurance, and even some insurance-specific concierge services. Working with these customers is not about pushing products, he said, however.
“We are No. 1 in variable annuity sales, but we have never gone in pushing a product,” Mr. Vaccaro said. “We don’t want to lead with the products. We want to help find the right solution for each client and each client base.”
Hartford wants to use a consultative approach, he said.
“We can’t win here with a pure wholesaling method,” Mr. Vaccaro said. “That will not work with these customers. You can’t go in with a product. This is listening. This is collaborative. This is a different approach, and some companies may not have the experience to succeed here. With some high-net-worth firms, you get one shot, and you have to approach this just right.”
