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American Funds, Others Sound Alarm Over Hartford VA Fund Changes

TedTed
in Fund Discussions
FYI: The Hartford left its variable annuity business behind five years ago -- now, a group of firms are accusing the company of leaving behind its legacy customers.

Ahead of the financial crisis, Radnor, Pa.-based Hartford Financial Services Group pitched its unique Hartford Leaders product to advisors, fund managers and investors as a way to provide customized access to leading investment managers and strategies within a variable annuity.

Now, American Funds, Raymond James Financial, contract holders and others are complaining about a plan quietly submitted to the SEC that would allow Hartford to replace about 60 strategies run by various active managers within the Leaders fund lineup with a slimmed-down selection of 11 funds.
Regards,
Ted
http://www.fa-mag.com/news/american-funds--others-sound-alarm-over-hartford-va-fund-changes-31372.html?print

Comments

  • jerry
    WHat's not clear to me is whether the new funds will be less expensive or more expensive. In general while most on thi site probably have more than 11 funds (I do) I do not think more than 11 funds are needed.Like most I assume I have lots of funds in part because I deal with several firms. I do not have as many as 11 funds in any one account
  • VintageFreakVintageFreak
    What I am not clear about is what is American Funds exactly upset about? Hartford got a break, and it is a competitor and therefore jealous?
  • msf
    I'm on holiday, so I'm just giving a quick look.

    Hartford filing (see Section IV for mapping from old funds to new funds:
    https://www.sec.gov/Archives/edgar/data/45947/000110465916142313/a16-17487_240appa.htm

    The old American Funds share class used was Class 2. Here's their Class 2 prospectus:
    https://www.americanfunds.com/individual/pdf/ina2prx-998_afis2p.pdf

    Sample swap: AF Growth-Income (0.54%) to HIMCO (Hartford house fund) Large Cap Core (0.49% including 0.02% waiver, 0.51% w/o waiver)

    I find the complaint credible - when I look at VAs, I look at both costs and breadth/quality of offerings. The new VA that customers may be locked into (haven't checked the VA terms) has similar costs, but relatively few options, all in-house funds, with no track records. The old VA had long established funds. I wouldn't think of giving the new VA a first look, let alone a second. The old VA at least had some funds that might be worth a look.
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