Close-Up with David Lau, CMO-COO, Jefferson National Life Insurance

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Jefferson National Life Insurance Co. has been running an ongoing campaign, created by Big Honkin' Ideas, Santa Monica, Calif., touting its variable annuity product. The company markets the product to financial advisers, but with a difference—instead of offering a commission on the product, it's priced at $20 a month to the financial advisor regardless of the size of the account. This month, Jefferson National completed an $83 million management buyout, led by Financial Partners Fund, a unit of Citi Capital Advisors, and plans to step up its marketing efforts.

CMO Close-Up: What is the essence of your marketing campaign in support of your flat-fee annuity product?

David Lau: We sell in two very different directions. One is an annuity rescue vehicle; in exchange for high-price annuities, clients can save quite a lot. But the real purpose of the product is to provide additional tax deferral. Most annuities are priced so high that they eat up the benefits of a tax deferral. For example, we did a study with the University of Chicago that showed that variable annuity tax deferrals were worth 0.8% to 1% benefit to the portfolio. But most annuities, in the form of commissions, are priced above that. By contrast, our rate of $20 a month works.

Of course when we say “variable annuities” to financial advisors, they think a lot of things our product isn't—costly, complex, lots of penalties and hidden fees. We've eliminated all those things, but it's an education, delineating an “us vs. them” position. That's why we launched our “Flat Is Beautiful” campaign, and the “Tax-Efficient Frontier” slogan taking from “Star Trek,” with a steamroller instead of the “Starship Enterprise.” We needed to grab the attention of financial advisors about variable annuities.

CMO Close-Up: Tell us about the scope of your campaign.

Lau: We use print to generate awareness of the message and the company, and then use email and online ads for direct response and to generate leads. As for mobile, a survey of our advisor base of more than 50,000 financial advisors found that more and more are going to mobile for different things. So we've done an initial foray with an iPad app called the Advisor's Voice, which is more marketing than functional.

Also, while we've done a little search engine optimization, we've moved away from this because we've found that the keywords that drive traffic are too broad—when people search for variable annuities we get a lot of consumer traffic. As for social, we've done it more around educating advisors on how to market themselves. We put together an educational series of articles titled, "New Rules for Growing Your Book of Business," on how advisors—not us—can use social media to build their practice.

CMO Close-Up: Tell us a little about the management buyout of the company, and how it may affect your marketing efforts.

Lau: The existing management bought out the old shareholders and brought in new ones. As well, we've gotten growth capital as part of the transaction. It's pretty much behind the scenes, but our marketing budget absolutely will increase. We had a terrific year in 2011, increasing our sales by a little more than 50% over 2010. For 2012, we anticipate 75% growth on top of that. As part of this, we'll be launching a couple of new products. One of the first will be some asset allocation models. As the financial world becomes more complex, it's hard for financial advisors to be expert in all areas, so we've seen where financial advisors are outsourcing at least some of their asset management and focusing instead on customer relationships. We'll launch a number of asset allocation models, offering alternative strategies depending on risk profiles of customers.

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