A yearlong educational campaign through banks helped Nationwide Financial Services Inc. increase variable annuity sales through the channel by 26% in the first quarter, its head of bank sales says.
The Columbus, Ohio, company boosted bank channel variable annuity sales to $326 million in the quarter, said Dave Giertz, Nationwide's president of bank channel sales. He attributed the increase to an aggressive campaign to educate bank reps about selling variable annuities in branches.
"We took a dedicated educational focus on bank reps," he said in an interview Friday. "We wanted to show them that there is an opportunity to offer these products and how new features that offer principal protection and income protection can help their customers."
Mr. Giertz said that, though Nationwide's bank sales of variables were "down to flat" last year, the company looked at metrics that foreshadow an upswing for the product. It expects a 60% increase in variable annuity sales during the next 10 years, he said, compared with the last 10.
"We looked at the demographics, and we believe that variable annuity sales will drive our growth over the next 20 years," he said. Sales growth in all products was 16% in the first quarter. Besides variables, Nationwide's products include 401(k) plans, life insurance, fixed annuities, immediate annuities, and income annuities.
Analysts have said they expect variable annuity sales will prove to have rebounded industrywide in the first quarter. Banks' variable annuity sales were nearly flat last year, according to Kenneth Kehrer, the president of Kenneth Kehrer Associates, a Princeton, N.J., consulting firm. His firm's data showed that the top 22 providers in the bank channel had $17.6 billion of variable sales last year, up 1.1% from 2004.
Mr. Kehrer said he expects many of the companies that distribute variable annuities through banks to post first-quarter increases. And Michael White Associates, a bank insurance consulting firm in Radnor, Pa., said everything indicates that variable annuities are ready to bounce back as more companies launch innovative riders to enhance a bounce.
Nationwide has introduced two riders since March 2005.
Mr. Giertz said, however, that providers must offer simplified solutions to stimulate bank sales.
"Many competitors keep adding features and benefits, and sometimes it can be too much," he said. "It is hard for investment professionals to keep up with the marketplace, which means it is even tougher for bank reps to keep up. We have to simplify things."
Mr. Giertz said Nationwide, which has sales arrangements with more than 200 banks, would continue to educate reps and offer new benefits.
