Cliff Jack, on his time as NAVA chair and, (ahem) ... his big shoes

The surprise announcement that Mark Mackey, long-running president and CEO of the National Association for Variable Annuities, was leaving, left us wondering what's next for the organization. Clifford Jack, NAVA's outgoing chairman (as well as president of Jackson National Life Distributors) reassured us it won't miss a beat. Jack took some time to fill us in on recent initiatives and what the near-future holds for the association.

1. Boomer Market Advisor: Where are we in the VA straight-through-processing initiative? Are remaining roadblocks technological, or is it getting state regulators on board?

Cliff Jack: All of the above and then some. The three categories I would crunch it into would be, No.1, the state regulators. To date, our progress has been very good as an industry. Folks are feeling very comfortable with this. No.2 is the standardization of the technology. One of the things that we have chosen not to do as an industry trade association is not to align or endorse any technology providers, but rather say, "Here are the standards that we're looking to have met and we welcome all folks who are interested in trying to help the industry." The last piece is the general implementation issues that are involved, whereby if you have a good platform and you have all of the regulatory approvals and requirements, now getting everybody to feed business into those standards is incredibly important, but also cumbersome.

2. BMA: What are the benefits of straight-through-processing for the advisor, specifically?

CJ: It's more than just the advisor. But let me take the advisor first. Right now, you have to be very motivated as an advisor to do business with variable annuity companies. We make it extremely difficult relative to most other parts of the financial services business to actually conduct a trade for your client. We make it difficult because we require paperwork and we require wet signatures. We don't have the transparency through the entire process to settlement. A variable annuity is very different in the settlement of, say, a separate account or mutual fund or general securities, et cetera.

3. BMA: Are you talking about high NIGO rates?

CJ: NIGO rates are one element. And the high NIGO rates are really driven by the fact that when you have a manual process, mistakes can be made. So it's just a much cleaner process. I think it's incredibly important that we get to a place were STP is on par with these other elements. And what that does from an advisor standpoint is No.1, it deals with the NIGO issue. But there's also benefit to the broker/dealer, we believe there's benefit to the consumer, we believe there's benefit from a supervisory standpoint and we think that there are benefits, ultimately, to the insurance companies.

4. BMA: One of the themes of last year's marketing conference was on capturing more of the retirees' rollover assets. Is the annuity industry doing a better job in this area? Does it have the marketing and educational material in place to assist the advisor?

CJ: We should be doing a better job. We could be and I think will do a better job. Relative to where we were a year ago, the answer to that would be yes. Relative to where we need to be, the answer is definitely no.

5. BMA: What has been your biggest challenge as chairman of NAVA?

CJ: The biggest challenge has been to try to attack all of the very important initiatives that NAVA has undertaken on behalf of its membership. NAVA for many years was strictly a marketing organization, whereby we had a couple of very good meetings that would bring the industry together and you'd have speakers and those types of things. Now, in addition to the meetings, the NAVA staff has been actively involved in educating all of the stakeholders, between the regulators and the various members that we have in addition to the regulators the individual state. So we have had lots of educational opportunities with those individual organizations.

6. BMA: What's going to be your successor's biggest challenge?

CJ: Well, just following me of course; big shoes, massive shoes. Until I walk in the door at home and then that starts to unfold, of course. [LPL Financial's] Mark Cassidy is our incoming chair. I would say that the biggest opportunity that we have and the biggest challenge he will have is to see through the things that on the date he takes over for me have not yet come to completion. And I don't expect that any of the projects and any of the things that I just mentioned will be done

7. BMA: Up until now the majority in the chairperson position have been from carriers. Do you think having a broker/dealer take over will bring a different perspective that will be healthy for the organization?

CJ: Very healthy. We talked about that a lot at the board. I have a bit of a different perspective because I'm the chairperson of our 3,000 person broker/dealer. So I have a tendency to look at it through two sorts of lenses. Mark is a student of the business. He's very engaged in the overall financial services business. His organization is, of course, involved with variable annuities, so I think he makes an excellent chair.

8. BMA: Mark Mackey's departure is a big announcement. How will it affect the organization and how is the replacement search going so far?

CJ: The search is going well. We've had a number of what would appear to be high quality candidates raise their hands. We're going through, as you would imagine, an orderly process to identify the best candidate we possibly can.

9. BMA: This will only be the second presidency in the organization's history, correct?

CJ: That's right. So it's important job. In terms of how the organization will change, until you land on the individual that will replace Mark, it's difficult to know what his or her ideas may be. We've made a decision to open it up -- open up the search to all high-quality candidates without saying that they need to come from a carrier.

10. BMA: Anecdotally, we hear from a lot of high-end advisors that would never have thought twice about an annuity, especially variable annuity. But they're coming around. Why do you think that is?

CJ: If you look at the demographic wave, their clients are demanding things that variable annuities can provide. Good advisors are always going to, hopefully, continue to be open and educate themselves on what they believe is in the best interest of their clients. Right now annuities are the only way to get guaranteed lifetime income and, on the other side, participation of the markets. It may not be right for all of your clients, but you at least have to look at them.

*For further information or to contact this author, please use the forum below.