Envestnet Exchange Begins Bold Plan To Boost Annuities

Annuities are about to get a lot more exposure with RIAs now that the first insurer has joined the Envestnet Insurance Exchange, analysts say.

The exchange integrates annuities into the Envestnet wealth management platform and gives advisors a more complete view of client retirement portfolios.

“As an advisor, you don’t have to leave the advisory platform that the equity portfolio is on to describe or offer the insurance solution to clients,” said annuity expert Paula Nelson, president of retirement at Global Atlantic.

Global Atlantic last month became the first insurer to make its annuities available on the exchange.

“I do believe it will be significant and a game changer for advisors who haven't had seamless access to insurance solutions in the past,” Nelson said.

Insurers report RIAs showing more interest in annuities as retirees look to protect incomes to replace disappearing pensions.

While insurers have worked to make annuities more attractive to RIAs, products haven’t been tightly embedded into wealth management platforms. That makes it inconvenient for advisors to toggle back and forth between different screens and systems.

“Over the years, the biggest request we’ve had from RIAs was to make the process seamless,” Nelson said. “We hear more from advisors about this more than we do about fees versus commissions – it’s really about making this seamless.”

Envestnet’s insurance exchange addresses that challenge by streamlining advisors’ wealth management practice to make it easier to guide clients toward financial goals, said Bill Crager, president of Envestnet, in a news release.

A Vote of Confidence

The insurance exchange will serve large bank wealth management units, independent advisors, broker-dealers and RIAs.

Fixed, fixed-indexed, variable, deferred, and private placement annuities from top insurance companies will eventually find their way onto the exchange, Envestnet said.

When an annuity seller like Global Atlantic decides on a platform it helps attract other insurers, said Denise Valentine, senior analyst with consultancy Aite Group.

“You get one and then they all follow,” she said.

Global Atlantic sells several families of fixed, indexed and variable annuities and “jumping on the wagon early is a very good move,” for annuities and RIAs, said Chris Eberly, vice president, of research and consulting at consultant Novarica.

Insurers and RIAs have other independent wealth management platforms to choose from, but Envestnet manages one of the largest with 87,000 advisors, 3,000 companies and 500 of the biggest RIAs using its services in one form or another.

For many years, RIAs stayed away from annuities because they were opaque, expensive and difficult to process due to unique regulatory burdens, drawbacks that left them sidelined, but recent new annuity introductions have addressed those concerns.

Pivotal Service: Guidance Desk

With the help of Fiduciary Exchange, a firm specializing in integrating advisory and insurance systems, Chicago-based Envestnet is planning to offer a service called Guidance Desk.

The desk, still in development, will allow unlicensed RIAs access to consulting and fiduciary services to allow them to use the exchange.

Guidance Desk could prove pivotal, Eberly said.

“It is very hard for a holistic advisor be an expert in all products so being able to get the necessary support including education and even licensing support is very important,” he added.

Small RIAs often find it prohibitive and expensive to have people to maintain credentials just to offer clients an annuity, so the desk could prove a boon in terms of making annuities accessible to a broader group of RIAs.

Offering RIAs products and services they are used to such as fee-based products, making it easy to learn about annuities, and incorporating annuities into client retirement plans can only help re-establish the value of annuities in the eyes of RIAs, Eberly said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]

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