Michael Kazanjian is the chief marketing officer of FIDx, a company working to help modernize the annuity industry.
Russ Alan Prince: Despite record sales, what are the main reasons you believe the annuity industry is stuck?
Michael Kazanjian: Despite achieving record sales of more than $4.2 billion in the first quarter of 2023, the industry continues to struggle with significant challenges. The main reasons for its stagnation can be attributed to regulatory hurdles, technological deficiencies and distribution constraints.
Firstly, technological deficiencies hinder progress. Outdated legacy systems and inadequate technology infrastructure make it challenging for carriers to adapt to evolving consumer expectations and industry demands. Limited automation, lack of integration, and outdated processes lead to inefficiencies and undermine the delivery of seamless customer experiences.
Secondly, distribution challenges contribute to the industry’s stagnation. Traditional distribution channels heavily rely on independent agents and face-to-face interactions, which create limitations in market reach and introduce geographical constraints. Diversifying distribution channels, embracing digital platforms and enhancing consumer education is essential for reaching a broader audience and meeting evolving customer preferences.
Lastly, regulatory challenges pose a major obstacle. Complex and ever-changing regulations impose administrative tasks and costs, creating obstructions to innovation and growth. Uncertainty around regulations creates a cautious environment, limiting product development and delaying market expansion.
Prince: In your opinion, have there been any notable changes or initiatives within the industry aimed at addressing the broken aspects of the annuity sales process?
Kazanjian: For quite some time now, the insurance industry has been working to raise awareness about the benefits of annuity products. While clients/savers show interest, many financial professionals hesitate to offer annuities due to the perceived complexities in the process, which in my opinion, shouldn’t put a stop to that conversation if the product is in the best interest of the client.
As of today, one of the major obstacles for financial professionals is the lack of consistency across carriers. Each carrier has its own unique set of processes and paperwork or order entry requirements, making it challenging to work with new carriers or expand partnerships beyond a few established ones.
Integrating annuities into existing wealth management platforms is another area that lacks seamlessness. The separation of annuity assets from the overall account often leads to confusion, making it difficult to provide a holistic financial plan during client meetings.
Additionally, the lack of integration between financial planning software and insurance carriers limits financial professionals’ ability to explore various annuity options and deliver comprehensive financial plans.
Post-sales service is also a concern. Ongoing management of annuities is crucial for advisors to align these assets with the client’s overall portfolio goals. But again, the lack of integration between carriers and wealth management platforms makes it difficult to identify and address issues in a timely manner.
While the industry has made progress in some areas, there is still much to be done due to a lack of innovation. In short, carriers have to meet financial professionals where and how they do business.
Prince: What role does FIDx play in addressing the challenges faced by the annuity industry?
Kazanjian: Through our Insurance Exchange, we’ve accelerated the account opening process by surrounding it with existing client data and product research and enabling seamless integration into wealth management platforms. And by putting suitability and appointment requirements earlier in the process as opposed to post signature, we have virtually eliminated NIGOs (Not In Good Order executions) from the lexicon. This smarter way of doing business provides greater insights through ongoing account management and reporting.
We’re transforming the sales process by enabling carriers to integrate their annuity products into existing wealth management systems more efficiently. This simplifies the process for financial professionals, allowing access to multiple carriers and their products through a single interface. Gone are the limitations of working with only a few established partnerships simply because the financial professional knows their system the best.
Promoting innovation is a key focus for us. Our platform facilitates the digital distribution of annuity products, allowing consumers and their advisors to research, compare and purchase annuities more conveniently. This supports the industry’s efforts to embrace digital transformation and cater to evolving consumer preferences. Overall, the infrastructure of our technology contributes to a more efficient, transparent, and customer-centric annuity sales experience.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.
