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you know, an annuity is just an income stream and you lose the asset and so on and so forth. That's not the case. >> Well, I think I've used the word customization maybe 17 times already in this conversation. They're just too difficult to work with. They're just too difficult to understand. [music] Hello and welcome to Investment News. I'm Greg Greenberg. Today, we're taking a closer look at innovations in life insurance and annuities and how they're reshaping the way financial
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professionals approach protection, retirement income, and long-term planning. From fee based products and AI driven solutions to advances in product design and advisor technology, we'll explore the trends transforming the industry and what they could mean for advisers and clients alike. Joining me for today's discussion are Colin Lake, president and CEO of Delaware Life Marketing LLC, Brian Nicolarsen, head of distribution enablement at Jackson National Life Insurance, and Belle Bielawska, a key account manager, RIA, at
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Mass Mutual Ascend. Welcome everybody. >> Greg, thanks for having us. >> So, we're going to start off with some questions for Colin. Colin, with the annuity market having roughly doubled over the past decade, what is the single biggest factor keeping carriers from rethinking traditional annuity models? >> So, I like the question. I like the like the starting point. You know, you're emphasizing a point of gratitude for from the annuity world as we've had a good deal of growth here the last five
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years. Um but with that growth maybe offers a tendency for some product development folks and some actuaries and other uh folks like that to sit on their hands a bit. You know this old adage of if it ain't broke don't fix it. We're rolling here. What are we trying to innovate or do more? But that hasn't stopped everyone. I think there's been a little bit of stagnation but that's probably more consistent with the annuity industry or the insurance industry as a whole. One bit of
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innovation that I think has helped or is of note with all of this growth is certain carriers. Delaware Life of course in this list has worked hard to emphasize this idea of innovation through simplicity of design and additional flexibilities of product. And so if I had to point to one of those innovations that I think is really interesting or really beneficial for like the longer term growth of our industry, it would be add more innovation around creating simplicity of the product while offering lots and lots
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of value. Um maybe I would offer this this one thought among all the advisers out there who use annuities. There's a whole bigger group out there who don't use annuities. And of that group of people who don't use annuities, 63% of them say the reason why I don't they're just too difficult to work with. They're just too difficult to understand. And so that is like the impetus for this idea is can you create enough flexibility in designs, enough simplicity of the product while still
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being innovative and offering enough value? And I think that's one of the real great innovations to keep an eye on, Greg. >> Well, speaking about flexibility, how should product designs adapt for retirees who need to outpace inflation without risking their principle? >> That's a good question because that's like the biggest growing trend in the annuity world. You mentioned those numbers in the last question. how much growth we've seen that has centered on I mean the whole annuity industry is
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growing but that is centered on the growth of fixed index annuities or FIAS and registered index linked annuities or RIAS and so what those products offer is minimal or no impairment to principle while giving you the opportunity to outpace inflation and so that idea you know of we've had this growth of market but where can we offer real innovation as it relates to outpacing inflation. I think that's one of the reasons why these Rios and VAS have offered such great value of note before I give you another
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consideration. If there's enough return in fixed rate or guaranteed rate products like a CD um or a fixed annuity, meaning enough return that's higher than inflation, that is one way to get a real return, returns above inflation. And um and so that's one way, but that doesn't offer that long-term solution. I think that's ultimately embedded in the question you're asking, Greg. And so what I would say is get one of these Rio products or one of these fixed index annuities and build out a diversified
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portfolio of index options or indexes within those portfolios. We've had a good deal of growth in the S&P 500. There's been lots of people relying on the S&P 500 for the growth that they want over time. But a diversified portfolio, as we all know over and over again, we're all taught over and over again, is what's going to work long term and helping us keep pace with inflation again those offer those real returns that everyone's looking for um without again taking too much risk of
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principle with the Rio product or no risk of principle at all with the FEA product. So, so we're really proud of that. We offer this feature which maybe we can talk about in just a minute here. But we offer this great feature on these things like if you off if you choose a diversified portfolio inside your fixed index annuity will add a guaranteed rate of return to the product as well as giving you that upside that that you're looking for to outpace inflation. Do you think indexing strategies tied to
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AI, crypto or private equity will ever become mainstream retirement staples? as that question is asked like just if I if I take word for word do I ask it Greg my answer is no like I don't think there ever going to be mainstream retirement staples um however I do think there will be further interest I do think there will be further investment um we've seen the trend in in broader portfolios outside of insurance products meaning you know just regular a regular diversified portfolio of people looking
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for um things that offer real divers diversification and maybe AI, crypto and private equity investments can do that. And so that's kind of been a proliferation of growth for investors outside of annuities and that'll get into the annuity world over time. So will it be one of these mainstream retirement staples? Will any three of those be mainstream? Probably not, but they will continue to grow. I'll offer um maybe a couple of considerations. First one is it relates to AI. Goldman
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Sachs does this study. I'll reference it twice here. Goldman STA Goldman Sachs does a study every year of insurers and how they're looking at innovation and what they're looking to do with innovation in all walks of the word innovation. Um and so in their 2025 survey um the number one theme in terms of the indexes that insurance carriers are looking to add is focused on AI related products. So there's lots of insurance companies that are saying, "How do we get this in our products and
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let's see if we can get some growth of investment for our policy holders inside of there." So that's the most interesting in terms of what's going to happen in the future. Today, the crypto market or Bitcoin related, you know, people tend to kind of interchange the terms, but crypto has finally moved from theory to product itself. So that's actually here. In fact, Delaware Life launched in January of this year a product with BlackRock. Um, we may have talked about it in the past,
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Greg, but with we offered this product with BlackRock. Um, and it's a crypto-based index product inside of our fixed index annuity. And it certainly gained a lot of interest from our folks. The interest in crypto grows. I think it's like something like 59% of all investors um plan to allocate greater than 5% of their money in crypto going forward. So there's lots and lots of interest in it and I think you're seeing the rest of the market follow what Delaware Life has innovated by
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adding crypto into an index product currently again with BlackRock supporting that effort. So we're really excited about that. And then the last part of it was the these private markets. Like do these private markets offer an opportunity because they've been more and more popular first with the really wealthy and now they're getting down to I think like more main street America portfolios and um I they're in the earliest parts of design and development. That that's definitely the case, but I'd like to see
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more of that. That's something we are paying attention to and figuring out ways that we can bring that into an index version inside of a fixed index annuity or a registered index linked annuity. But love that question cuz yeah, you know, we'd all love to see more of that. In your view, what specific value proposition allows a carrier to capture advisor mind share in the very competitive IMO space? This is this is a really um important question as it relates to the topic of the day because IMOS have in my
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experience and like all I have observed over these last 5 years or so and longer [clears throat] than that but specifically the last 5 years they've been the most interested in innovation. They've been the most interested in and willing to adopt products that are pushing or nudging along the edge to do something different. And so in order to gain mind share, I think they need to see you continuing to try new things or be willing to try new things that are additive to the overall um experience in
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the IMO market. Um may maybe an important consideration here is I think like if you're really going to engage the IMOS, they need to know that they have a seat at the table in the process of innovation. So, when you get to work with someone, they'll ask, you know, can I weigh in on the products? Don't just show up to me. Here's a product. Here's a right guide. Here's, you know, can you, you know, can you sell it? They want to be at the table prior to all of that stuff happening. If
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you're willing to do that, you engage their mind share quickly. And then if they have a seat at the table and then you act on it because they have good ideas, if you act on it, you really gain that that growth of relationship and then ultimately that loyalty of that relationship or in that relationship. And then maybe just one other um this is a real good piece of innovation that came from this exact process I'm talking about here. We have a bonus product in the IMO space, a
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good product, one that's sold very successfully, but we have a feature in there called the lowest starting index value. And that that works for the first 90 days, the lowest value of that 90 days is when your money gets invested. So, you invest at the absolute best time in those first 90 days of investing it and then you get the bonus on top of that. And so that like little piece of innovation has like gained such market share or such mind share and ultimately the market share from the IMOS because they love that innovation.
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They love that they were at the table in creating that innovation along with us. And then do flexible income writers and the locked model allocations truly benefit end investors or are they built for advisor convenience? >> I guess I would start with the ideal world. I'm sure Brian and Belle would agree. The ideal world is they are going hand in and like one's not at the expense of the other. That that's like the ideal world as we think about it. Um but it's ultimately a good
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test of a product design. I think it's a good challenge for our advisers who are listening or if there's clients listening on behalf of their advisers like it's a really good um test. Does the product have enough simplicity for the adviser to be able to explain it to me? And does it have enough flexibility and guaranteed income and locked or uh returns that I can count on or rely on unquestionably? And so yeah, my question my answer would be yeah, like if someone
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buys a contract at 58, they're probably going to buys an annuity contract at 58, they're probably going to turn the income 10 years later. Greg, that's a decade of holding a contract. And I am I'm not that old yet, 58 years old. But I imagine in that decade, 58 to 68, a lot of stuff's going to change in my life. I'm probably going to be retired. I'm probably going to move. You never know about health status. You never know about marital status. Um you never know about, you know, ultimately the kids
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and grandkids and all the So like you need flexibility. Like you need the these things that offer flexibility of design and simplicity of use while offering these guaranteed income or these guaranteed lock strategies so I so I can get the returns that I need. One of the great statements I've heard said is the hardest thing an adviser is asked to do is plan today for a 35 year retirement. Think about how hard that is. I today knowing what I know today and knowing that I'm not
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going to know what's going what's going to go on the next 35 years. I have the plan today for all that. So, I need something to be flexible. I need something to evolve with me and innovate with me. And so, so yeah, I think they should go hand in and with one another. I do I don't think it's a panacea type thing. I think it's something we should rely on and hold our carriers out to deliver on for the advisers and their clients. All right, we're going to go around the horn on this one. We'll start
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with Colin since you already warmed up. How has the growth in fee based annuities compared to commission based products impacted RA's willingness to adopt those in their practices? The good news is the carriers on at least on my screen on your right and left have much more experience in this world than I do. Um we have we have had multiple efforts in in in this space. Um, so I'll have a few thoughts, but again, Belle and Brian are going to have a lot more data, a lot more things to consider
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as we answer this question as hopefully completely as possible. So my first point is the sales in um fee based products, fee based annuity products, uh, specifically related to the RA market have grown like exponentially. I think they're up like 150% or something like that year-over-year. they continue to move forward albe it off a very low base that you know they haven't sold a lot in the past they continue to grow so that's been a really interesting thing to watch and then
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those RIAS who have traditionally been slow to move into or think about or mess around with this annuity space are starting to pay more and more attention to what these annuities offer while allowing them to structure them the same way they do with the rest of their product lines. So like they're in in theory anyway, an RAIA, registered investment advisor, they are fee based in in theory and by definition in most cases. And so they need a product that that adopts to the way that
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they approach their business with their clients. So we slowly have innovated to offer enough products, enough interest in those products to get the RA market to look closer at it. Okay, I'm going to ask Brian the same question. How has the growth in fee based annuities compared to commission based products impacted RA's willingness to adopt those in their practices? >> Sure. And I think Colin's hitting the initial nail on the head in the fact that we've seen massive amount of growth
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in this space in what I would call a relatively short period of time without having fee based annuities. It's virtually a non-starter in the RA space just due to the fiduciary way that they are set up as an IR within their RAIA. So what I would just say is that without fee based annuities, the space is back to where Colin had initially said really ground zero, not seeing any type of growth. But I will say what we have really focused on at Jackson and what we do um center our resources around is really focusing around that.
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You need a complete process. you need a fantastic front-end process for them and that has to follow all the way through to the back end of how they service that business on the back side. So, we've really centered as important as product always is, it's that process for the RIA that is just as important because they do not have that broker dealer intermediary there helping them through uh the logistics of that. But from a product standpoint and a solutions based standpoint, it's completely opened up a totally different
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universe to where now these I ARS are able to go to their clients through their planning process and now talk about guaranteed income sources, talk about different ways to control taxes, talk about different ways to think about estate planning that really wasn't an option at least even through Jackson, you know, a short period of time ago. And I'm talking short period right less than 10 years ago. So, it's a it's been a game changer. >> Bel, I'm going to ask you the same
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question. How has the growth in fee based annuities compared to commission based products impacted RA's willingness to adopt those in their practices? >> I wholeheartedly agree with both Colin and Brian. Um, the growth has been exponential recently. We just announced at Mass Mutual Ascend that we hit our $2 Billion mark and over 900,000 of that was just in the last 16 months. and we've been live for 10 years now. So really it is taking like a much faster pace these days and I think it's because
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of this healthy competition. When we first started in this space we were the first ones offering a fee based FIA and as time went on you know more of our peers came into the space and that created some healthy competition which I think in general makes us all so much better. It helps the end consumer. Um, what it's allowed us to do is really be innovative. We do work with our IMO partners as well to try to come up and hear what they're saying, what advisers are saying, and innovate and
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what I also like to call sort of renovate, right? So, we're taking this old framework that we had. We're updating it to today's standards, which is what RAS are looking for. They don't want to spend hours filling out an application. They don't want to look at two different screens to see the full picture. So this competition, friendly competition is really great for the industry and overall for the consumer and I think that's what RAS are starting to see. >> All right, now I have a few questions
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for Brian. Brian, in terms of flexibility, transparency and retirement income customization, how are annuities becoming more innovative? Look, I think there is a tremendous amount of innovation that is taking place in the annuity space and a lot of the questions you had asked Colin earlier hit on the majority of that and the change and the rapid change that is happening within the annuity space and just the last question on the RA space um goes into that but I think what you are seeing overall is there is a
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tremendous amount of increased flexibility not only for the advisers but also the clients um you've got greater liquidity options that can be chosen. and you've got shorter surrender periods if as we were just talking about in the advisory space a no surrender period type to products um investment flexibility is increased I think you've always seen investment flexibility inside the variable annuity space but that is carrying over to the other product lines whether that be registered
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index linked annuities or fixed indexed annuities um you're seeing a much broader choice of how you want to invest the money and then continuing to customize these products As Colin had spoken to earlier, you know, it is not a one-size shoe fits all for everybody when you think about just either the variable annuity or the registered index linked annuity or whatever annuity you want to point to. Everything is coming with a high level of customization to it. Um, and I think that is in lie and or is caused by you
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know the financial planning process that's really happening at all levels of financial advisers and financial professionals across the board. as we continue to create this increased transparency um I think that it is helping the industry from a the environment that we sit in today of this fiduciary standards trying to be met um the customization has led to increased technology advancements as well you talked about AI earlier but you know we're doing a lot even with our own website where advisers can come in they
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can use tools available to them inside where they can use the KYC of the client And it allows them to narrow the search down of the products and really guides them to solutions for exactly what they're solid looking for so that they can truly stay customized to that individual client's needs or whatever the portfolio need might be at the time. >> And what are the most significant annuity product innovations changing the industry right now? >> I think as we've previously mentioned, I
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think you're seeing just a massive shift just away from that one size shoe fits all mentality. um you're seeing continued movement in the direction that advisors and clients can select almost in an allocate basis um what is needed for their for their situations. So by doing this, annuity providers are now allowing products to be chosen to meet consumers concerns. Um whether that be market volatility, whether that be retirement income as we talked about earlier, it might be even something for tax control.
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uh all of this is doing is in place and trying to meet a balance between what is the growth that you're looking for from this part of the overall investment or portfolio while meeting the right the right downside type protection and you know all of this continued innovation is married with I think a much higher level of data integration that is taking place across uh the industry that is allowing tools and resources to be provided to financial professionals that helps them illustrate how this investment is
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integrating into the client's overall portfolio. >> Brian, what is your company doing to support financial planners to make it easier for them to present annuities as a viable addition to their retirement portfolio? >> Yeah, I think I've alluded to a couple things already, but kind of a little bit more of a reiteration and some clarity around that. You know, Jackson's approach has been to make sure that we are not presenting solutions to advisors that feel like standalone investments,
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but rather we are looking to provide investments and solutions that feel and integrate and are more in line with the client's overall portfolio. And so, you know, whether it is us partnering with third-party resources out there or it's us creating our own internally, it's really centered around providing planning tools, the technology, platform integration, optionality, um optionality including even things like different share classes as we talked about earlier, whether that's advisory share
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class or that's a brokerage share class, but really trying to get everything aligned so that nothing is kind of sat satelliting around out here as its own standalone item, but that it's more incorporated in general into the overall client relationship and doing that by providing additional practice management to our financial professionals that we work with. >> So, how can annuity providers act more like planning partners and less like product manufacturers in their relationship with financial planners?
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>> Sure. And I think I think all this kind of intertwines together and dub tales off of one another. you know, I would just continue to look at the broader industry. I think in general as Colin had talked to and had spoken to earlier um is just doing a much better job of taking a more holistic planning approach rather than as I just mentioned prior kind of like a standalone where everything is very transactional based looking at the full picture of the client's needs and even the full picture
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of the needs of the advisor at their practice level. But all of this, the providers that continue to align themselves wi with this type of mindset, we believe are going to better position um themselves to build long-lasting relationships either with the advisers, with the clients that they are serving and the broker dealer partners that we're working with. You know, you look at the financial professionals that are looking for providers that are able to consider, I think, multiple factors. you know,
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they're wanting a partner where they can understand, you know, what the relationship brings, but be looking at that and say, okay, do you have those solutions that help me protect against market volatility, that help me protect against longevity risk, that help me protect against income planning or tax and estate considerations. All of this within the lens of I've got a an overall financial plan that I'm trying to meet for my clients. And customization seems to be a term used more often in
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retirement planning right now. How is your company addressing this request from financial planners for support in customizing retirement planning? Well, I think I've used the word customization maybe 17 times already in this conversation. So yes, it is very widely used um across the industry and I think that's just the demand that you are seeing you know within the annuity space and outside of the annuity space is that um you know consumers are wanting things to fit uh their life, their needs, their
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wants and so you know Jackson's approach has been one that has started by providing a product spectrum that truly allows financial professionals the flexibility through the entire planning process that ultimately ties together during implementation. So, one of the newer innovations that we have built within our what I'll call kind of our digital ecosystem, the experience that we provide for financial professionals through our website. Um, the website provides financial professionals to
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come in. Um, they can provide personalized content. It allows them to self-service many of the steps of the annuity work serum as we talked about earlier and the RA process thinking about that front to end full ecosystem process there they can manage a lot of that themeselves um and then getting new tools provided to them that provides the education to the financial professional on the different types of products that best meet their clients needs and information on how if they need to um obviously one of Jackson's uh big value
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propositions is the wholesaling support that we provide in the field. So we offer them access into that and how to access that support. But they do all of this on our website by first choosing what experience are they going to have with Jackson. And that experience starts with the channel that they're associated to. So if you're working, if this advisor is coming to us from the independent channel, the bank channel, the wirehouse channel, the RAIA channel, they choose that on the front end. And
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by choosing that then kind of it sets the wheels in motion for the rest of the path and the experience that they're going to have with us and we have catered that to support to support them based on where they're at, not necessarily where we're at. >> Okay, here's another question where we're going to go around the horn and we'll start with you Brian. How is AI being used to assess insurance needs? >> I think it's still a little unknown and it's a work in progress right now. Um I
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think we are trying to find our way through the AI space right now as it is evolving. You want to talk about annuity sales evolving and rapidly increasing the speed at which AI is evolving is well above that. So you know AI is helping uh us shift I think some of our insurance need assessment from a broader demographic assumptions towards more individualized. Um so it's allowing us to dial that in. I think it's allowing us to then think about, you know, how we tailor some of our strategies even more. So, you know, we
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are seeing financial advisors using AI as an assistant for a lot of their task management type items. Um, getting through emails, responses, documentation, those kind of things. you know, where we still sit is, you know, I think there's areas of concern still within AI around data security, um, false information, lack of context or ethical biases that can happen within the AI space. And so, I think there's a there's a large space around just protecting client information. And
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there's a large space around compliance and regulatory issues that at least from our perspective that we are still trying to work through and make sure that we had the right um guard rails put in place uh when implementing you know the AI tools. >> Bel, same question. How is AI being used in your view to assess insurance needs? Similar to what Brian said, I think we're still at the beginning stages of this. Um, I've been to a lot of conferences this year and AI is always a
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topic and while the resistance in like the compliance teams is starting to go down, um, there is still some hesitancy. So, I think you know what I've been seeing is a lot of advisers are using AI to help build out manage portfolios, right? So they're sort of using it to vet out um the investments that they want to use, not necessarily using it for a specific client and their sort of sensitive information. So it is still a little bit more higher level. Um and they're I think they're doing the same
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thing with the insurance needs. They're looking to find the best product or more so the best carrier maybe and then also find ways to help sort of build that portfolio for the client as their life evolves, right? So some of us sort of go through a straight line in life. We start our job, we build our career, we get married and you know sort on grow in our career and then we retire. But then there are people who have to make really significant pivots. Things happen and AI helps advisers I
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think in those specific situations right where they have to make a quick pivot that they weren't expecting or maybe fill in a gap that they weren't expecting. So, so far it seems that it's sort of a research tool more so than for like the overall portfolio rather than each individual client themselves and sort of client specific information. >> And then Colin, in your view, how is AI being used to assess insurance needs? >> I three considerations I have to and
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they're in line with what you just heard from both Brian and Bell. Pacific Life does this um underwriting um survey and so in in this year's version of it, it said 24% of all insurance carriers are using it regularly as a decision support tool. meaning in terms of building out product, pricing product, the actuarial piece of each business um unit that they take on depending on what kind of business, excuse me, what kind of insurance business um these actuaries are involved with. So, it's 24%. So,
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like you heard, it's not necessarily everywhere yet, but it is starting to get used. We happen to use it a lot in particular in the actuarial world. Um so, so that's the first thought. The second thought is from a servicing point of view. So once we have a client um on the books, we are consistently looking to understand what do those clients want from us once they own a policy with us. And so like there's 385,000 people who own a Delaware life contract. And what we want
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to do is say what makes them h what makes them happy if we can understand those types of things. What things don't they like? What things they want more of? And so AI is doing a really good job at directing us um and guiding us along this path to continue to find those nuggets and then emphasize them um or eliminate them if it's something that that folks don't like. And then the third part and this is my specific like this is my like vision um Greg is this is from like a sales and distribution
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perspective. I believe that there is an advisor who looks more like the other advisers who sell a lot of Delaware Life. Like there's a person who does not sell Delaware Life, but they look just like everyone else who sells Delaware Life. We have to know who those people are. So AI can do a lot of work in terms of helping us understand that. And there's also clients that that look like people who own Delaware Life's policies and really love what Delaware Life offers. And so we're trying to
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understand that at a macro level so that we can bring that data to the clients and say how many clients you have that look like this. These people tend to attract or be attracted to the things that we do as an organization. So it's more of a support or a planning tool rather than saying hey you should give us business because we're better than someone else. And so all three levels of that from like an actual point of view from a client um success rating point of view and then from a distribution and
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sales point of view we use it in all three walks of life. >> Okay. Now I have some questions for Belle. Bel, what role should advisory FAS play within a client's overall portfolio and which client profiles are the best fit for them? It's >> a great question and it doesn't have a very specific answer either. Um, annuities are very versatile and they're not a one-size-fits-all solution. Um, we personally have three different FIA options that are fee based for our clients and I know some of our
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competitors and our peers do as well. Um, some of these FAS are really meant for those clients who are looking for safe accumulation and for example, we have a product that has a fixed bucket in there paying 575 guaranteed for 5 years. Now, that that's a pretty number to guarantee for 5 years for a client in today's rate environment. um 575. So, so again, this is an accumulation tool, right? Then we have something that is out there looking to replace the steady and reliable paycheck
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with a guaranteed income stream. So, those are the clients that are looking to, you know, sort of replace that that paycheck after they retire um and they're using the annuity for the income stream. Then there are others who are looking for tax deferral. So, those that may have maximized their 401k and they're trying to find another way to kind of uh set away some of those taxes. So there are so many different uses for these products. We also have many trust cases, right? Trusts are taxed at really
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high rates. So we have a lot of clients coming in specifically those higher uh dollar amount cases that are really there to help the taxes in a trust or maybe um generational planning as well. So there are so many uses and I think that's one of the things that's misunderstood in the industry is that you know an annuity is just an income stream and you lose the asset and so on and so forth. that's not the case. Um, and that's just FAA. We also have fixed annuities, there are Ryas, there are VAS,
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all for different kinds of clients. So, I think it's really important to get that education out there and look at the client, look at the products that are available, look at the tools within the products that are available um, and sort of help the client. But in general, I think um, many of the clients are pre-retirees, right, or retirees. We're not really seeing many 40-year-olds uh, uh, purchase these products. Um, and they're right there in that portfolio for the clients who are want the
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growth but also some safety. >> And what are the recommended methods and compliance considerations for charging advisory fees on advisory annuities? >> Fee billing is probably one of the most important considerations when an RA is looking at a product or a solution for their clients. Um, RAs usually have set billing agreements with their clients. There are some sort of standards they have. there are agreements that they sign and we want to make sure that that annuity billing falls within those guidelines as well.
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It can accommodate the billing that the adviser does. It's important that all the carriers can sort of accommodate that billing structure and work together. And that's why I said earlier the competition is really what makes us better because we're all sort of trying to figure it out but also build something that if one carrier uses it, the others want to do it as well. What we find is that most advisors are billing these annuities directly from the asset. So that's a huge consideration. You don't want to make
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just leave the option to Belle from other assets and they're billing at the same rate. So um I do a little bit research on fee billing and when I first started doing this this research I was seeing that our annuities were being built at about 75 basis points and that's you know at the start when people were really looking at this as sort of a satellite. Today it's 95 basis points. So what that tells me is that over these last few years, these advisers have really seen this annuity be a part of
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the overall portfolio, just another sleeve, and they are billing it in the same manner they're billing the rest of the assets. One more important consideration is that most carriers did obtain a private letter ruling from the IRS, which allows that annuity to be build, those withdrawals to come out for billing without them there being a taxable event. but they are capped at one and a half percent. So we do want to stay within those guidelines. >> What challenges do advisers face when incorporating advisory annuities into
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portfolio reporting and performance tracking software? >> A lot less than previously. I'll tell you it's great. I mean there's still there's definitely still room of improve for improvement, but with the renovations that I mentioned earlier, I think we're seeing a lot less friction in these spaces. Many of us, and I think Brian mentioned this, we have built so much technology around this. We have built so many relationships with performance uh reporting software with managed uh account providers also with
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financial planning software. So there are so many collaborations out there and so many integrations that we're seeing this become less of an issue and a lot more easier for advisers to work through. So today they're sort of not swiveling that chair. Um they're seeing the annuity in one space. The client is seeing that value on one consolidated statement. But there's still so much room for improvement, right? Fintech is growing. Um fintech will be there to help us make that annuity a little bit
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more defined in that picture. So whether that's adding something like um the income stream added into the software, right? So that they can see those withdrawals coming out and as a guaranteed withdrawal or maybe see what the benefit bases are if you'got a living benefit or a death benefit. So there's definitely some room for improvement, but there's not as much need to update the tracking. It's more so adding in a little bit more of a defined picture. >> And what licensing, registration, and
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continuing education requirements should advisors be aware of when offering advisory annuities and FAS? >> Advisory annuities are at the crossroads of two different governing bodies, right? Maybe even three. So um licensing has to come from all of those sides. So on one side you have someone who's signing the application. They're the financial professional and they would need to hold a state life insurance license. On the other side you're charging on the asset. So you need a financial professional who would have a
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65 or a 66 and those are those investment advisor representatives of a registered investment advisor. You know those are the folks that we're talking to. If you're also considering a registered product like a RIA or VA, the adviser would also need a six or a seven and be a registered representative of a broker dealer. So there are quite a few requirements and then there's CE associated with all of those. But what we've also found is that a ton of investment advisor representatives are
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still insurance license. So for us where our top product is the index protector 5, it's a fee based FIA. That's all that they really need, just an insurance license and to be an AR. So, there's not much friction there. Um, for those that are not insurance licensed or maybe those that want to offer a RIA and don't have a broker dealer, there are many uh firms out there called oids or outsourced insurance desk which we work closely with and they act as the licensed agent on the application. So,
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now the adviser acts as the adviser. They manage the asset. They Belle on the asset. It's in their um data and on their statements, but the insurance agent signed the application and they took on the suitability. They took on the insurance license, the FINRA license, and all the CE. So, the adviser can do their job and not have to worry about all these different licensing requirements, especially for all the different product types, right? Um we're trying to find ways to sort of take as many of these hurdles away from advisers
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so that the clients can have all of these solutions and licensing tends to be a big one. But now with these solution providers available as time goes on I think we'll see less and less friction there and more advisers being able to offer these. >> And now a question for everyone. We'll start with you Belle. How is private equity ownership impacting the insurance business? Oh, I I've been hearing some talk here about private equity in the past and you know, I represent Mass Mutual
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Ascend. We are a mutual company and while I know that there are benefits to both sides, we are an A++ rated company. We've been around for 175 years and I'm really proud of that. So while I know there are so many benefits to PE and some of the growth that can come around that the stability that we have here I'm really proud of. >> Colin your thoughts how is private equity ownership impacting the insurance business. short answer is a lot and it is so I'll elaborate on Pel's
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comment is so there's in the past there has been mutual companies Mass Mutual New York Life companies like that there have been publicly traded insurance companies Jackson National Lincoln those types of companies there's private companies like Delaware life or privately owned organization and then this fourth group which is these private equity owned insurance companies That's specifically what the question you're asking. So in 2011 2011 there was 16 of these private equity owned insurance companies and to
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25 there's 93. Um so their share of the market has grown from 2.5% up to up to 20%. And so they are growing and once private equity gets into a space as we all know and anything that we've experienced that has private equity sniffing around is they look to push the envelope. They look to disrupt. Um and they're doing that in so many different ways. They're forcing all of us to be more competitive from an investment perspective. Um because if we're not as competitive as they are from a
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investment perspective or an investment return perspective with the insurance proceeds then we're not going to be able to offer as competitive a product offering as they bring to the market. So they're doing a lot to disrupt. Now there of course with any private equity infiltration there is downsides to this and I think Belle was starting to allude to that there. There is some risk with these folks coming in here because with that disruption and that excessive risk-taking, you tend to have some
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things as fallouts or unintended consequences. And this is an industry that's been around. You heard Mass Mutual 175 years has been around. The insurance industry has been around is this slow moving to the whole point of our conversation. Slow moving. Don't get in trouble. Don't take on too much risk. And private equities are just the opposite of that. So, they're doing a lot, Greg, to disrupt or impact um what we're doing in this insurance space. And I think we all need to be aware of that
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and act accordingly. >> And Brian, your view, how is private equity ownership impacting the insurance business? >> Yeah, I I'll be succinct to it. I think they're both hitting the points of probably where we land as well. You know, I think private equity ownership has absolutely uh to Colin's point, accelerated innovation. It's accelerated the competitive environment. um it's created a lot of capital infusion into the insurance industry you know and then there's the other side of that it has
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also then increased a lot of attention around the risk management structure uh for insurance companies it's pushed for you know more ask around transparency and you know it's putting it's putting everybody's view back on long-term financial resiliency um at the center of it all and so I think I think there's a lot to still play out uh from PE space. >> Great insights from everyone today. Colin, Brian, and Belle, thank you for joining us and sharing your perspectives. And thank you for
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watching. For more coverage and insights, visit investmentnews.com. I'm Greg Greenberg, and we'll see you next time. >> [music]
