Outsourced investment management and fee-based annuities were the topics dominating the first day of InvestmentNews’ RIA Summit 2022, which kicked off Monday in Boston.
After opening remarks from InvestmentNews senior columnist Jeff Benjamin, a panel featuring Richardson Financial Services president Steve Richardson and Gateway Financial Partners founder David Wood discussed when, why and how registered investment advisers could successfully use turnkey asset management providers to grow their practice.
Consolidation of wealth management firms is making it increasingly difficult for small RIAs to survive, said Wood, who compared the dynamics of the RIA industry to that of the medical industry. In 2002, 75% of physicians owned their practice, while 25% worked at a hospital, Wood said. Those numbers flipped over the last 20 years, and today it’s hard to find a doctor who owns their practice.
“Financial services is going through the same thing, whether you like it or not,” he said. “I think the smaller firms, unless they’ve outsourced a lot of stuff, it’s going to be really hard to grow and thrive.”
Without having to worry about things like technology, payroll or filing insurance claims, doctors have been able to scale their practices and take on many more patients. The same lesson can be applied to financial advisers who outsource investment management, billing and back-office support to focus on growing their book of business, Wood said.
Though Richardson didn't agree that small, independent RIAs would struggle, he agreed about the value that TAMPs can provide — “not just investment management, but also in technology, back-office support and operations,” he said.
And clients don’t balk at paying a management fee to advisers turning assets over to TAMP, Richardson added. “If you’re charging the client an [assets under management] fee, the services you’re providing them will be invaluable if delivered properly.”
Following the discussion of TAMPs, executives from four insurance firms talked about how their industry is developing new products and breaking down traditional barriers that prevented RIAs from offering annuities to clients.
Tracy Fraser, direction of institutional annuity markets, national accounts and global relationships at Transamerica, shared how stripping commissions out of annuities allows advisers to drop the fees associated with the products. And there is significant investor interest in the products — Transamerica is getting a lot of traction, with retail consumers calling them directly to purchase annuities, Fraser said.
There is still work to be done to make the products easily accessible within advisers’ technology, but insurance companies see the growth of the RIA market and want to make them accessible, Fraser said.
“The fee-based annuity has been around for quite a while, we just needed to put the infrastructure in place to support it,” she said.
However, annuities have historically had a low adoption in the RIA channel, said Matt Ohme, senior vice president and head of advisory and strategic accounts at Allianz Life Financial Services.
“This is a business problem, not a product problem,” Ohme said, adding that insurance companies including Allianz are directing significant investments toward getting products in front of advisers.
There are three misconceptions about annuities that continue to keep many RIAs from engaging with the product, said Paul Waldeier, assistant vice president of RIA distribution at Lincoln Financial Distributors. The first is that many think they must be affiliated with a broker-dealer or have an insurance license to incorporate annuities into client portfolios, and the second is that historically, the design of the products wasn't palatable to RIAs, he said.
The third is that annuities weren’t easy to incorporate into a financial planning practice at scale, and this is something all insurance companies are looking to overcome. No one wants to log in to different portals just to access reports on each product, Waldeier said.
“That’s a big deal; folks don’t have time to endure manual processes,” he said. “If it’s not turnkey or easy to implement, it doesn’t matter the value [an annuity provides], it won’t see the light of day.”
The Illinois order refers to Brandon Ellington’s investment program as a “Ponzi-like scheme.”
But the Amazon executive chair seems to want it both ways, arguing that taxing the ultra-wealthy won't help struggling Americans.
Northern Trust planning leader sees the bill extending qualified charitable distributions to employer plans as a potential positive step — but advisors shouldn't overlook bigger holes in the strategy.
Markets will always create reasons for investors to worry. The advisor’s role is not to predict uncertainty, but to help clients understand why volatility should not derail a well-built financial plan.
Plus, Asset-Map partners with Contio to elevate the advisor meeting experience, and MyVest claims an innovation in portfolio management with separately managed models.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
