Fintechs are introducing new digital insurance marketplaces to meet rising demand for the products among financial advisors.
SS&C Advent is now offering a new, aptly named Insurance Marketplace for advisors to find annuities, life insurance, long-term personal care and disability products for clients. The marketplace will be accessible through SS&C Advent’s portfolio management and accounting solutions, including Black Diamond, Axys and APX.
Insurance and other protection products are quickly becoming a cornerstone for advisors expanding beyond traditional asset management, says Scott Reddel, the lead of Accenture’s North American wealth management practice.
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“Product innovation in this space will only increase, and platform providers are accelerating their marketplace strategies to give advisors an accessible, diverse product shelf relevant to their clients’ needs,” Reddel says.
SS&C’s marketplace follows in the footsteps of Envestnet’s Insurance Exchange, which launched in 2019 and now includes eight large insurance carriers offering a mix of fee-based and commission-based products.
Just as Envestnet turned to fintech firm FidX to power its exchange, SS&C Advent’s marketplace is built in partnership with DPL Financial Partners, an insurance management platform for RIAs. Beyond a menu of providers and products, both platforms also provide data feeds to integrate insurance into client portals, fee calculations, billing, reporting and financial planning.
Where the two diverge is in the insurance carriers on the platform. While Envestnet features a few big-name firms like AIG, Allianz and Prudential, DPL instead partners with nearly 30 smaller firms and focuses on commission-free products for fee-only RIAs.
DPL is also more focused on helping RIAs find products that fit their business model, according David Lau, the firm’s founder and chief executive officer. Part of the integration with SS&C Advent will provide advisors access to DPL consultants to evaluate commission-free products that meet a fiduciary standard, Lau says.
“Our technology is focused on product discovery, selection, comparisons and finding the most efficient products for your clients,” Lau says. “They are more focused on the post-sale implementation of the product.”
“Where our product differs is helping with product delivery and selection,” he says.
SS&C Advent will also provide insurance reporting in data feeds, letting advisors include the accounts in client portals, fee calculations and financial planning.
Envestnet did not respond to requests for comment.
The multi-trillion dollar RIA marketplace is still relatively untapped for insurance products, creating a business opportunity for insurance providers. But what isn’t obvious is if RIAs, many of whom view “annuity” as a dirty word, will sign up.
Yet continued market volatility, driven by the ongoing coronavirus pandemic and the upcoming presidential election, and low interest rates have many RIAs rethinking the role downside protection can play in client portfolios, Lau says. DPL works with around 1,000 RIA firms, and “membership has been booming” during the pandemic, he says.
At the same time, the growth of low-cost, commission-free products is making annuities more palatable to fiduciary advisors, while technology makes finding and implementing them easier than ever, Lau adds.
“Most of the [negative perceptions] stem from the fact that it was a conflict of interest for them. They couldn’t get paid for them,” Lau says. “If insurance and annuities had always been commission free, RIAs would be power users. The benefits to retirees are tremendous.”
While RIAs gain more access to these products, traditional insurance carriers and retirement providers are expanding their wealth offerings to grow advice-led client relationships and keep assets in-house, Accenture’s Reddel says. For example, MassMutual partnered with Commonwealth’s Advisor360 platform and is aggressively growing its independent broker-dealer channel. In June, Empower Retirement acquired Personal Capital to establish a presence in digital advice.
“Insurance firms are revisiting what a meaningful offering can look like,” Reddel says.
This article originally appeared on Financial Planning.
