Innovation | 11.03.20
Better Late Than Never – Annuities Technology Plays Catch-Up
Prior to the start of the pandemic, a number of advisory enterprises made it a priority to automate, to the extent possible, their annuities-related processes. They’re now glad they did.
For banks, the time it takes a customer to open a checking account is being measured in minutes. The time involved in opening retirement accounts – owing to automation and e-signatures – has, likewise, dramatically sped up.
Annuities, industry members say, are lagging; The process takes weeks. One big reason is that FINRA, SEC, and state compliance requirements are stringent.
Of those firms that did not prioritize enhancing and streamlining annuities-related functions before the pandemic, more of them are pursuing solutions since then, as face time has become the new abnormal and electronic signatures (e-signatures) have quickly become the standard operating procedure.
Carrier by carrier, across some of the biggest clearing platforms, with attention and buy-in coming from all relevant parties, more automation and e-signatures are steadily being integrated into the workflow, according to Deb Freesemann, director, CUNA Brokerage Operations.
Still, relative to other account types, annuities remain labor intensive.
FireLight Path Forward
Helping to alleviate industry inefficiencies is a company called Insurance Technologies. They provide innovative sales and regulatory automation solutions to insurance and financial services companies. Earlier this year, the company's FireLight Sales Platform lit a path forward for Schwab Advisor Services, which announced that FireLight would be implemented within its annuity concierge service. The toolkit allows Schwab reps, serving RIAs, to automate more annuities' application activities, or at least those applications that are deemed to be "in good order."
It's not just a way to create a simplified and accelerated sales process; application data collection, as well as the e-signature and submission process, also has been sped up for the RIAs. There's even back office integration so all relevant parties in the e-application process are kept in the loop.
iX Marks the Spot
Envestnet has said that iX – powered by Fiduciary Exchange software and giving insurance-licensed advisors tools to more easily integrate annuities into wealth plans – represents a major technological leap forward in the heretofore-slow-to-evolve realm of annuity sales processing. Advisors using the Envestnet TAMP access iX and its shelf of annuities through their desktops.
If processes get easier, then more RIAs will weave annuities into accumulation-centric wealth plans, Alan Assner, head of annuity product development at Brighthouse Financial, told RIJ.
In an Aite report published seven years ago, the results from an informal survey of 16 large distributors suggested that e-signature adoption in connection with new annuities business was limited and, for replacements, nonexistent.
A couple of large distributors successfully had launched e-signature initiatives as of 2013. More have followed suit over the past few years.
The 16 distributors had indicated that they’d wanted to adopt an enterprise solution approach for e-signatures. Howeer, one that included not only annuities, but also distributors' other financial products; interviews with carriers and distributors made it clear that they wanted certification for updated, front-end processes, Aite said.
Multiple vendor solutions can be used with e-signature standards for front- and back-end processes, so long as they have passed the IRI certification. A certified, vendor-neutral approach for e-signatures was expected to facilitate their increased use within the 1035 process, but was seen as being dependent on the largest annuity carriers' ability to standardized forms, according to Aite.
Traction For iPipeline
Last year, iPipeline, a provider of cloud-based solutions for the insurance industry, announced a record increase in the number of annuity transactions processed using their AFFIRM for Annuities product.
Some 35,000 advisors across numerous large institutions use AFFIRM to execute order entries for variable and fixed indexed annuities. It streamlines and accelerates the order-entry process and has been built and upgraded over time to support customized workflows and suitability reviews.
Last month, iPipeline announced it acquired Impact Financial Systems, a provider of service request automation solutions for client on-boarding, asset movement, maintenance, and advisor transitions.
Larry Berran, CEO, iPipeline, said that in the current pandemic, advisors need digital technology now more than ever to overcome the business obstacles. IFS's automated alternatives to manual, outdated processes "is contributing in a huge way to driving advisor sales into today’s environment.”