The modern-day wealth management industry is quickly warming to the idea that it's no longer dealing with your father’s annuity and insurance business.
During a popular session InvestmentNews RIA Lab Thursday entitled "Fee-Based Everything," the focus was on annuity products and how the insurance industry has evolved to strip away commissions to reach the fee-based advisory channel.
“To you, as an RIA, the world has changed dramatically over the past five years,” said David Lau, founder and chief executive of DPL Financial Partners.
“Five years ago, an investment-only variable annuity was basically the only game in town,” Lau said. “The primary usage for annuities at that point was to see if a client had one and then roll it into something low-cost to bring under management. Today, every kind of annuity is available to a [fee-based] RIA.”
The panel discussion, which focused on helping fee-based advisers access various insurance products for their clients without having a broker-dealer affiliation or Series 7 license, compared the platforms to the way custodians work with registered investment advisers.
“The first question we always get is about billing and making a trade,” said Mike Reidy, vice president and head of RIA distribution at Security Benefit.
“You can bill right from the platform and make trades and create model portfolios,” Reidy said. “It’s very easy, it’s seamless, and all part of the onboarding process.”
Matt Ohme, senior vice president at Allianz Life, added that the insurance industry has moved toward the independent advisory space to be “part of the ecosystem.”
“I would look at the insurance company as another custodian,” he said.
Lau agreed that questions about how to bill clients on annuity products are among the top concerns he hears from RIAs.
“It’s the primary reason RIAs have never liked insurance products, because it wasn’t billable assets,” he said. “They used to call it annuicide because you were sending assets out the door.”
Over the past few years, Lau added, insurance carriers have jumped on the fee-based bandwagon because “that’s where the puck is heading.”
“There are so many carriers supporting fee billing in so many ways,” Lau said. “Fee billing is dramatically different from five years ago.”
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