Envestnet details plan to add annuities to wealth management platform

Insurance Exchange is designed to help advisers include insurance in financial plans, even if they aren't licensed to sell it

May 18, 2018 @ 1:48 pm

By Ryan W. Neal

Envestnet plans to add insurance to the ever expanding list of products and services it offers to financial advisers.

First announced by president Bill Crager during his welcoming keynote at the Envestnet Advisor Summit on Wednesday, the company shared more specifics on how it plans to add annuities to its core platform.

The Envestnet Insurance Exchange will connect insurance carriers (the firm did not specify which ones) with large financial institutions to make it easier for advisers to include insurance in their financial planning and wealth management services. It will include fixed, fixed-indexed, variable, contingent-deferred and private placement annuities.

For advisers who aren't licensed to introduce insurance products, Envestnet also plans a concierge service it calls Guidance Desk to provide consulting and fiduciary services that allow for unlicensed advisers to use the insurance exchange.

Insurance Exchange was developed in response to growing demand for retirement income solutions across the industry, Mr. Crager said.

(More: Are annuities finally getting some respect?)

"Whether you're an RIA, a broker-dealer, or sitting in a bank, asset protection is going to matter more," he told InvestmentNews.

Envestnet plans to eventually integrate Insurance Exchange into its other distribution channels, including Tamarac, Envestnet's technology platform for RIAs.

Tamarac group president Stuart DePina said this is a new area for many RIAs, but believes the advisory firms could use the Insurance Exchange to analyze whether a client is in need of insurance, and if so, incorporate it into the financial planning process.

"We don't think our advisers will become insurance salespeople, per se," Mr. DePina said.

Advisers today have to separate client portfolios and insurance, which Mr. Crager said breaks apart their value. By bringing them together, advisers can use one system — Envestnet — to handle the entire financial planning, execution and reporting process.

Mr. Crager calls it a "full holistic advice solution."

"You select the right insurance solution, hit the button, and we will work with insurance firms to make sure that executes," he said.

Part of the power will be in using data about the client to find insurance products that are customized to the investor's needs. A guided selection process will help ensure the product fits a client's need and the adviser remains compliant.

Interestingly, Envestnet first announced the product as "Envestnet Fiduciary Exchange" on Wednesday morning before renaming it "Insurance Exchange" by Wednesday night. A spokesperson said the name change was made for compliance reasons.

Envestnet's announcement echoes an April decision from Cetera Financial Institutions to combine its version of MoneyGuidePro with its web-based insurance purchasing portal. At the time, LeAnn Rummel, CFI president and chief executive, spoke about eliminating "the artificial separation from insurance and planning," and helping advisers to "determine how much insurance coverage is needed, which solutions would be most appropriate and process insurance business online."

Mr. Crager said he is aware of the negative perception many in the industry have of annuities, but he said that the concerns are not with the actual products offered today. The insurance industry does a "tremendous" job helping to protect client assets and generate retirement income, he said.

"They've created a bit of a branding issue," Mr. Crager said. "As part of an overall wealth process, you're not selling an insurance product, you're not selling a mutual fund. You're providing a solution to reaching a financial goal."


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