Making Advisors’ Lives Easier Is New Way Into $9.3T Market

Outsourced insurance desks provide carriers with a new way to reach registered investment advisors with little insurance background looking for retirement income and protection products for their clients.

It’s no secret that sellers of life insurance products would love to catch the eye of the financial advisors that control more than $9 trillion in client assets.

Now they have a better lure: the “outsourced insurance desk,” a team that guides advisors in selecting complex products, like variable universal life insurance or fixed indexed annuities, or in estate planning. When it’s time to close the deal, the agents on the desk have the necessary insurance and securities licenses too.

Five years ago an “outsourced insurance desk” was rare, but now they’re popping up all over. There are at least a dozen around the country, according to one rough estimate. Some of the “desks” are in fact independent firms, like DPL Financial Partners and RetireOne. Others sit within broker dealers, custodian companies and independent marketing organizations.

“We’re in the early innings,” said Ed Mercier, president of RetireOne, which works with insurers to offer registered investment advisors life, annuities, disability insurance and structured notes. Insurance desks are knocking down barriers and making it easier for insurance products to reach advisors, he said.

All together, advisors that are independent, fee-only and dually registered control $9.3 trillion in client assets, up from just $2 trillion in 2003, according to estimates from Tiburon Strategic Advisors, a research firm. The last category refers to advisors that are registered both with the Securities and Exchange Commission as a fiduciary advisor, and so can charge fees for advice, and as a registered representative of a firm and so can collect commissions.

Big Gap to Fill

Mercier said the bulk of those trillion dollars in assets gathered by SEC-registered advisors who collect fees included little in the way of life and retirement products. “There’s a big gap and a big missed opportunity,” he said.

Cumbersome state-based insurance licensing requirements provided a further disincentive for fee advisors to think about life and annuity products. In the past, they have preferred to leave that chore to insurance agents.

Fiduciary rules and best interest standards have forced the life insurance industry to rethink how to make retirement income and asset protection more accessible by offering advisors simpler, less expensive products that are easier to understand.

“These outsourced insurance desks are erupting because of the new registered investment advisor distribution that has come into the annuity space since the initial discussions of the best interest standard,” said Sheryl Moore, CEO of Wink, publisher of Wink’s Sales & Market Report.

Moore said just 1.2% of the $59.7 billion first quarter annuity sales were coming through registered investment advisors who charge fees. “Yes, it is a great opportunity to get in front of a new distribution,” she said. “However, the sales just aren’t there yet.”

Dedicated, independent outsourced insurance desks would include companies like RetireOne, DPL Financial and FIDx, said Mercier. Among the independent marketing organizations with dedicated insurance desks are Financial Independence Group, TruChoice Financial, Producers Choice Network and Advisors Excel.

Technology firms with desks to help advisors with structured products, such as notes and annuities, include Halo, Simon and Luma, Mercier said. Outsourced insurance desks have popped up at custodial firms: Schwab, Fidelity, Raymond James and LPL Financial.

The carrier Midland National makes its products available through outsourced insurance desks managed by DPL Financial Partners, Halo, RetireOne and RIA Insurance Solutions, according to Midland’s website.

Chris Chen, a financial advisor in Massachusetts, said he uses an outsourced insurance desk provided by Tampa, Fla.-based LLIS, which bills itself as an extension of fee-only financial advisor firms for life, annuities and long-term care.

“They do good work for run-of-the-mill products such as term life,” Chen said in an email. “I haven't used them for the fancier things such as variable.”

Desk Details

At the independent marketing organization Financial Independence Group, three salaried financial professionals work at the company’s outsourced insurance desk, said Nicholas Ross, chief distribution officer.

The desk was set up just before the pandemic hit, he said.

Ross said some advisory firms outsource just fixed products, or variable products, or more complex cases beyond term life. “There's all sorts of ways to utilize the outsourced insurance desk,” he noted.

Advisors who don’t care to go through the insurance licensing process, prefer avoiding complex insurance transactions or fear losing a client to another advisory firm with insurance capabilities can turn to companies like Financial Independence Group, he said.

Ross estimates there are about six outsourced insurance desks within independent marketing organizations and that number is growing. Outside of the top 15 independent marketing firms, there’s less of a reason to set up such desks because marketing intermediaries become more regional and specialized, he said.

Most of the business coming into his company’s insurance desk comes from fee-only and dually registered firms, said Ross. “That’s where we see more of the market moving as opposed to the traditional insurance agent or investment manager doing just stocks and bonds. That’s how this whole outsourced insurance desk started.”

At Financial Independence Group, the insurance desk works with advisors who collect a fee for service or a commission on the product sale.

John Keddy, an analyst with Aite-Novarica, said that if advisors can rely on a desk with a cadre of insurance experts, that makes the life of advisors easier as they look to incorporate retirement income products into the investment portfolios of clients. “I can see these desks getting more traction and interest,” he said.

Cost structures vary, he said. Insurance desks set up to handle fixed products in a few states is fairly straightforward. Desks that handle products for advisors with clients in all 50 states and overseas, in Guam, for example, or desks that need to accommodate variable products, would be more expensive.

“It’s really about what the carrier or the independent marketing organization wants to do,” he said.

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