Charles Schwab & Co. has overhauled its flagship variable annuity by bringing in more than a dozen brand-name investment providers and dropping several funds with lackluster performance. Schwab also changed the name of its Schwab Signature Annuity to Schwab OneSource Annuity (effective May 1) to represent the diversity of investments offered through its mutual fund supermarket, according to a company memo. “Each of the 20 fund families represented in the Schwab OneSource Annuity also participates in Schwab’s OneSource mutual fund service and is recognized by investors for no-loads, no transaction fees and good value,” the memo states.
Lara Edge, a spokeswoman, said the recent changes to OneSource Annuity were an isolated event and that the firm will not embark on a broader campaign to promote annuity sales. “It’s more of an accommodative product for clients who have an annuity and want to change it into another one for lower fees. It’s not something we’re out there actively pushing,” she said. “Essentially the fund changes we’ve made was to bolster a couple of the asset classes we though were underrepresented and take out underperforming products,” said Edward Mercier, v.p. and general counsel at Charles Schwab Insurance Services. New funds added include: Alliance Bernstein Growth & Income, Neuberger Berman AMT Regency, Alliance-Bernstein Small/Mid Cap Value, Pioneer Investment Management Mid Cap Value, DWS Dreman Financial Services Small Cap Value, Franklin Templeton Investments Small Cap Value, DWS Blue Chip, Wells Fargo & Co. Advantage Opportunity, Third Avenue Management Value, Alliance Bernstein Growth, Delaware Growth Opportunities, Pioneer Growth Opportunities, AIM Investment Management International Growth, Alliance Bernstein International Value, DWS Health Care VIP and Seligman Investment Management Communications and Information.
Schwab also froze new contributions into the following several funds due to middling performance, an insider said: Dreyfus Growth & Income, AIM Core Equity, JP Morgan Small Company, Old Mutual Large Cap Growth, Janus Aspen Large Cap Growth, DWS Small Cap Growth, Federated International Equity, American Century Investments International, AIM Technology and Fred Alger & Co. American Balanced.