DPL was honored to sponsor NAPFA’s recent Spring Conference in Phoenix. Having worked to develop products and services for RIAs for over a decade, I relish opportunities to listen to and interact with thought leaders in the Fee-Only advisor profession. My team and I spoke with scores of NAPFA members and attended thought provoking sessions from original thinkers like Wade Pfau; we were energized by the insights and feedback of NAPFA members looking for new ways to better serve their clients in today’s changing market.
Reflecting on our three days in Phoenix, there are three takeaways that stand out:
1) NAPFA members are curious and open to learning about new, commission-free insurance products and how these products can help strengthen their practices and better serve their clients. Many advisors I spoke with expressed cynicism—or stronger feelings—toward insurance carriers and traditional insurance products for valid and well-deserved reasons: lack of transparency, high costs, and big, conflict-laden commissions. At the same time, they recognized that it is important to the profession to have fiduciary-friendly insurance products for their clients, who want, need and, in many cases, already own insurance. Not surprising, given that data shows some 40% of households with $1M-$5M of investable assets own annuities. Fee-Only advisors were enthusiastic about efficient channels to access low-cost, high-value products, as well as new strategies and expertise to leverage these products for their clients.
2) While there is growing enthusiasm in the profession for new product options and fresh ways of thinking, more commission-free products are needed. Today, consumer desire for choice, value and transparency is driving new business and product creation across industries—from Amazon to Uber to Everlane. The insurance industry sees the writing on the wall. To meet the needs of Fee-Only advisors and their clients, insurance carriers are beginning to embrace the same notions of choice, value and transparency and new products are coming on the market. On the flip side, as several NAPFA members noted, if the current products aren’t used, more new products are unlikely. I have witnessed this firsthand—after successfully launching Monument Advisor at Jefferson National, a dozen carriers launched their own versions of the product.
3) There are great resources within NAPFA to help solve this industry problem and move the profession forward. I have always been impressed by the willingness of NAPFA members to share information and knowledge with their peers rather than view them as competitors. Wade Pfau continues to provide leadership in ways to tackle the complex problem of retirement income by showing the benefits of historically maligned products like annuities and reverse mortgages. More broadly, I was moved by the expressed desire of many members to “do their part” in DPL’s mission to bring low-cost, commission-free insurance to market. While I was prepared to have to sell the value of insurance, I was surprised by the many “How can I help?” and “Thank you for doing this!” comments we received.
There is no question that the world is moving toward lower costs and greater transparency from product and services providers — values that NAPFA members have long held. This personal crusade of mine—to bring low-cost, commission-free products along with price competition and transparency to insurance—is gaining momentum. I am fortunate to be joined at DPL by a talented and energetic team of believers and am massively encouraged by the support and vision of the NAPFA members we interacted with in Phoenix.
As Bob Veres recently wrote, now is the time to “make the last bastion of commission-based distribution move toward fee-only and fiduciary.” I left the NAPFA conference with an even greater sense of passion and determination to help drive this change. I encourage NAPFA members to take a fresh look at insurance, use these new products (whether through DPL or carriers like Lincoln, Ameritas, or Nationwide who can work with RIAs directly), provide feedback, and refer other advisors to join us in making insurance viable for fiduciaries and their clients.
David Lau is an executive with more than 25 years of professional experience directing strategy for innovative financial services companies. Mr. Lau has expertise in financial services sales, marketing, technology and operations.