In a twist on the usual bank-insurer alliance model, SunAmerica Inc. has decided to use the services of bank-owned Pivot Inc. to provide annuity services to its registered reps.
In the first quarter SunAmerica's nine broker-dealer affiliates are to begin using Pivot's Web-based annuities system, which includes order-entry, processing, and service tools. The deal was announced Monday.
"In layman's terms, it's an electronic order entry system for variable annuities, fixed annuities, and possibly even insurance products that takes a lot of the paperwork out of the process," said Russ Phillips, the chief marketing officer for SunAmerica Financial Network, which includes the nine broker-dealers. Five are owned outright by the Los Angeles insurance company, and four are part of SunAmerica's sister company, American General. Both insurers are owned by American International Group Inc. of New York.
The system lets broker-dealers automatically fill in annuity applications with customer data from their own computers, Mr. Phillips explained.
David Koterba, vice president of marketing at Pivot, said the system was originally designed for use in the branches of its banking parent, Wachovia Corp., to help platform reps place annuity orders. The system will also be rolled out in those branches during the first quarter.
Research shows that, when annuity applications are filed on paper, 50% to 70% of them have errors, Mr. Phillips said - anything from a mistyped Social Security number to asset allocations that don't add up to 100%.
Fixing these errors is "a pretty paper-intensive process - the mailing and remailing and faxing and refaxing. It's labor-intensive and frustrating to all concerned," Mr. Phillips said.
Using the computer system can avert many human errors and speed up the process on the back end because the applications can be sent via the Internet to the annuity provider, whether SunAmerica or another carrier, he said.
If other carriers lack the ability to accept the data electronically, the broker-dealer can print out a copy and mail it. But the error-reduction benefit is preserved, and all the data are present in the broker-dealer's own system.
There is no standard way to transmit data to annuity carriers, Mr. Koterba said, but Pivot is working with companies to develop one. If other annuity providers agree to accept information from the SunAmerica Financial Network broker-dealers who use Pivot's system, he said, the process could be extended to these providers' other broker-dealers, creating a huge potential market for Pivot.
Mr. Phillips said that Pivot's system has the potential to be rolled out to AIG's other distribution systems.
The nine SunAmerica broker-dealers are Royal Alliance Associates in New York; SunAmerica Securities in Phoenix; FSC Securities in Atlanta; Sentra Securities Corp. in San Diego; Spelman & Co. Inc. in San Diego; American General Financial Advisors Inc. in Houston; American General Securities Inc. in Houston; Franklin Financial Services Corp. in Springfield, Ill.; and Advantage Capital Corp. in Atlanta.
Pivot, which is based in Columbus, Ohio, supplies private-label insurance agency services to Wachovia and other banking companies. Mr. Koterba said it has always designed Web products for its parent with the eventual intention of selling them in a broader marketplace, as with this annuity order system.
Mr. Phillips said the fact that Pivot is owned by Wachovia was key to SunAmerica's decision to go with an outside technology provider for its order system because, in a time when many technology companies face uncertainty, it was important to pick a vendor "with the financial wherewithal to stick with it."
