Envestnet Exchange Offers Insurers A New Way To Sell Annuities To Advisors


Annuities have never been an easy sale for financial advisers. So far.

Customers had to be convinced of the wisdom of investing a large sum of money and waiting decades for payment. Advisors could not make a sale unless they were licensed by the state where the potential sale was made. And insurers have generally buried advisers in a storm of documents filled with tiny characters, boxes and blanks.

“Advisors often had to go back and forth so many times with the changes that they threw their hands up in frustration,” said Rich Romano, CEO of FIDx, a privately-held fintech firm based in Berwyn, Penn.

Romano’s company designed the smart software behind Envestnet Insurance Exchange, a web-based platform that gives financial advisors the ability to select, price, apply and get carrier approval.

The exchange is part of a larger wealth management ecosystem that Chicago-based Investnet (2020 sales: $ 998.2 million) offers some 100,000 registered investment advisers. Over a dozen insurers offer products on the Envestnet platform, including AIG, Prudential, TransAmerica, Allianz, Brighthouse Financial, Nationwide and Global Atlantic.

FIDx-Envestnet’s setup is unique, said Paula Nelson, co-director and general manager of retail markets at Global Atlantic Financial Group, the first carrier to offer its products on the exchange when it opened in 2018.

Investment and insurance products have historically relied on different sales, marketing and distribution channels. But the deregulation of financial services, coupled with network communications, has radically reshaped the landscape, creating more competition between insurers and businesses on Wall Street.

Asset managers have come to understand the importance of using annuities to provide another source of portfolio income, by hedging against downside risk in the market. The problem, however, has been how to sell these products given the Byzantine way of selling insurance in the United States. Carriers and agents must be licensed in each state where they wish to do business. At the same time, agents who typically sell insurance want a larger share of the investment management business. The two sides converge.

The addition of annuities to the Envestnet platform marks a milestone in the industry, Nelson said.

“It’s really about industry working together to solve some of the problems,” Nelson added. “We are starting to see a convergence of sales organizations as we [insurers] go to the registered investment advisers area.

Fintechs like Envestnet are leading the transformation. These companies are reshaping the financial services industry, putting pressure on the way businesses and advisers sell, package and deliver products.

Technology and artificial intelligence are increasingly used to help make decisions and speed up treatment. In the case of Investnet, for example, the company uses AI to help advisors develop a comprehensive plan for a client’s portfolio, analyzing investment alternatives based on the client’s profile and others. variables.

CNBC reports that fintech assets under management, estimated at $ 460 billion in 2020, are expected to exceed $ 1,200 billion by 2024.

What is behind the growth? Lower fees. FinTechs charge 0.25% to 0.50% of assets, compared to the typical 1% -2.5% charged by larger, more established companies.

Andrew Stavaridis, executive managing director of Investnet, said the insurance exchange is helping solve a long-standing problem of having two different sales channels – one group of advisers / agents selling insurance while another s ‘occupied investments. This dichotomy made the planning process too complex for advisors.

The Envestnet exchange creates a cohesive, streamlined approach to selling annuities, said FIDx’s Romano. Carriers can interact with advisers. And advisors have the tools they need to help clients make a decision about the insurance they want to purchase.

The application process is simplified. The information entered in a client’s financial plan is automatically transferred to the insurance proposal. If an agent is not authorized to sell annuities, the application goes to a central insurance bureau which purchases the policy on behalf of the advisor. The arrangement complies with state and federal laws, Romano said.

“Insurers like it too,” Romano said. “They had great difficulty entering this market. Now they have a platform that emphasizes the importance of annuities and allows insurers to provide advisors with the products they need.

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