New Research: Competition on the Payout Continuum

Merely two years ago, the competition in the retirement income space appeared to be at a stalemate…or perhaps more accurately—a lockdown. The fast-growing guaranteed withdrawal benefit (GWB) segregated fund policies issued by insurers established a new benchmark in terms of desired product feature set. Their formula of downside risk protection, income and estate preservation, liquidity and potential for upside growth, created a potent competitive challenge for other players, such as banks and fund companies, with designs on the dominance of the retirement market. The GWB message fell on fertile ground in an investor and advisor universe spooked by the 2008 bear market losses and the ensuing market volatility.

Fast forward two years and the competitive planes have shifted. The insurers’ current focus on de-risking has brought about a rapid de-emphasis of the GWB product line. Although not all insurers have vacated the space, other competitors have quickly picked up on the shifts, accelerating their payout phase product development and marketing efforts. The result is a vibrant and fluid payout phase product landscape, one with a finer competitive balance and product innovation expected to continue for years to come.

This special research feature int eh currnet issue of the Insurance Advisory Service adds another chapter to our ongoing coverage of the retirement market, initiated in our Household Balance Sheet Report research and continued in the research feature published in the Summer 2011 Fee-based Report, which focused on the distributor perspectives. This time we turn our attention to the products and solutions populating the payout phase product continuum. For more on this topic please see the latest issue of the Insurance Advisory Service Posted by Goshka Folda