Unlike many other insurance contracts, annuities are marked by significant fluidity where accounts change daily, weekly and monthly. When an accountholder makes a change, the service provider must be prepared to hold up their end of the bargain.This isn't always easy. A report commissioned by Edison, N.J.-based NaviSys Inc. states that "many potential customers fear the loss of control of their money as an immediate annuity essentially locks up those assets for the rest of their lives."

The report, conducted by David Ricker, Navisys solutions consultant, and James Reynolds, marketing actuary, also notes that "in the past, consumers were content to receive a periodic annuity payment. Sudden lifestyle changes may necessitate flexible access to those funds."

As a result, consumers now demand liquidity, variable features and contract changes. Because consumers want more control over their investments, the onus will continue to be on financial advisors to provide these services.

As providers make a case for expanded annuity marketing, Navisys advises annuity providers to forego major administration system replacement to get it done, and consider instead a strategic payout administration system, which is based on new technology. This strategy can be implemented rapidly and doesn't carry a heavy price tag, the report says.

This technology must not only address basic order-entry efficiencies, but must take the next step from a technology standpoint. Info-One, which is an operating unit of Charlotte, N.C.-based Wachovia Financial Services, is planning to do just that in 2003 through the creation of more robust capabilities within the VARDS trading platform. So far, Info-One has generated alliances with six distributors and 26 carrier partners, who market their annuity lines via VARDS.

"We've been able to leverage the research and development of VARDS from Wachovia's Isis technology platform for annuity trading," says Eric Denham, Info-One's vice president for product development. "Banks have long been known for good-order rates of better than 90% in the annuity space. Realizing this, Info-One has been incorporating the efficiencies housed within Isis into VARDS.

"But we're not satisfied being just an annuity trading platform. We have to take the next leap. In 2003, we want to fulfill our goal of being a complete service provider through research tools and illustration tools for brokers to conduct side-by-side product comparisons. This will greatly enhance good-order trading and make annuity processing a once-and-done proposition," Denham says.

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