Massachusetts Mutual Life Insurance Co.'s new retirement income unit plans to expand distribution of sophisticated retail investment and planning products beyond its agency force to include broker-dealers and banks.
The unit, MassMutual Retirement Income, will start offering its Retirement Management Account through channels other than its 4,000-agent sales force in the first quarter, said Drew Dickey, senior vice president for retirement income. MassMutual is building a second product in the adviser-focused suite that will be rolled out a year later, he said.
The Retirement Management Account, introduced in May, is an investment advisory program and an individual retirement account that makes mutual fund model portfolios and an immediate lifetime income annuity available in one account.
Its planning software calculates the necessary investment amounts as well as the pace at which assets should move from equity investments to payment annuities, Mr. Dickey said.
"We are making it easier for advisers to do what is theoretically possible for them to do on their own," he said.
The account is aimed at retail investors with $1 million to $4 million of assets, he said.
Charles "Chip" Roame, the managing principal with the San Francisco consulting firm Tiburon Strategic Advisors, said MassMutual is one of the first insurers to create such a multifaceted product. "Everyone knows they need to do it, and they are trying do it, but the fact that MassMutual is out with it is insightful," he said.
Companies with similar offerings include Wachovia Corp., Ameriprise Financial Inc., and Fidelity Investments, Mr. Roame said. Annuities' guaranteed-income riders are "more like a little tweak" than a comprehensive solution.
MassMutual announced the formation of its retirement income unit this month, following in the footsteps of several other insurers. In February, John Hancock Life Insurance Co., a Boston unit of Manulife Financial Corp., announced that it had formed a retirement income and rollover solutions business unit. In November, Jackson National Life Insurance Co. launched a retirement and wealth strategies group.
The MassMutual unit, formed by merging the Springfield company's annuity and income management units, reports to Roger W. Crandall, the parent's chief investment officer.
MassMutual already sells annuities through banks and currently has $16 billion of annuity assets under management. But Mr. Dickey said he was not counting on banks to be a major distribution source for the new accounts.
Most of his company's sales through banks involve annuities and are "transactional" in nature, he said; they take place through a retail brokerage or platform sales force.
By contrast, MassMutual's new suite of planner-designed products will be used largely by the private-banking and trust areas of financial institutions, Mr. Dickey said. "We'd have to switch our focus to the upper-floor guys. We haven't figured out how to do it yet."
According to Mr. Roame, banks' desire to control their customer relationship is likely to be one challenge in distributing retirement products such as annuities through financial institutions, because a product that appears to compromise that control is likely to face skepticism.
The Retirement Management Account's mutual funds use asset management provided by OppenheimerFunds Inc., which is majority owned by MassMutual. Though the company advises its own variable annuities, it uses unaffiliated subadvisers to manage them.
When the account becomes available through third parties, it will switch to an open architecture. MassMutual may use an outside fund-selection firm to choose a range of managers, Mr. Dickey said.
The account was developed after MassMutual bought Golden Retirement Resources two years ago.
