Animal Spirits Podcast - Talk Your Book: Commission-Free Insurance

Episode Date: February 5, 2021

On today's show, the guys talk with David Lau from DPL Financial Partners about how they're improving the insurance sales for advisors and their clients.    Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk Your Book is brought to you by DPL financial partners. Go to DPLFP.com to learn more how they are opening up the world of insurance and annuities to RIAs. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holtz Wealth Management. All opinions expressed by Michael and Ben or any podcast. guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for informational purposes only and should not be relied upon

for investment decisions. Clients of Rithold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. This one was kind of near and dear to your heart because you got your start in this financial world as an insurance broker, right? That's true. How long did you do that for? A failed insurance broker slash agent. How many people in your family did you try to sell an insurance policy too? Oh, it's such a horrible experience. Isn't that what they tell you to do? Start with your family and friends. Oh yeah. My dad bought a policy. I bought one for myself and my girlfriend at the time, now my wife, and that was the only sales that were made. I didn't sell a single policy to

anybody. It's impressive. The only reason why I lasted as long as I did was because I had nowhere else to go. 2009, where was I going? No experience, no degree. Well, a degree, not a great one. I saw the incentives at the insurance company. I was calling people who didn't want to talk to me to sell them products that they didn't want to buy. The only arrow I had in my quiver was permanent life insurance or disability insurance, I guess. I was going out and meeting people. To sell? Like, I had no business talking to anybody about anything, let alone life insurance. Right, because you didn't have any expertise in life insurance area. It was just you were supposed to sell, right? I was 22. I had no idea what I was doing. Quickly, I started

to learn what was going on. There was a book. I don't even want to say the name of the book, but there was a book that I read it. I was like, I'm out. I'm out. It was basically like, take money out of your 401k, but it's your life insurance. It's the only thing that's guaranteed. And it was, see, what happens when you invest in the stock market? Like, there was a lot of that. And I wish, I wish I had some of my old illustrations that compared investing $15,000 in a life insurance policy versus investing in the market. And for somebody who didn't know anything, they were very compelling. 2009, especially, I'm sure.

Hell yeah. So these places do not write billions and billions and billions and dollars premiums a year because they don't know how to market and sell. They're very good at it. Yeah. I'm glad that I was never in that type of position because I couldn't just pick up the phone and dial people all day and try to sell. That's not my personality.

After a thousand people hanging up on you, you start to develop a bad taste of your mouth for it. Someone recently said that blogging is networking for introverts. That works. Maybe that's why I write so much because we're not good at selling that much. But so on today's show, we talk about taking that bad experience and insurance that you had and maybe making it a better one for RAs. And I actually think we've talked to a number of tech platforms in the last couple of years that are geared specifically towards RAs. And I think a lot of people have this idea that in the future, fees for financial advising and financial planning have to come down because fees have come down elsewhere too. And I certainly think that is possible and probable maybe. I don't know what the timeline is. But I think the other end of that is not just the that fees will probably come down, it's that advisors are just going to have to offer more services. So I think insurance is one of those in estate planning. And that's why just putting

together a portfolio and asset allocation for someone, Robo advisors came along and showed how that was a commodity in some ways. Not that you can't differentiate yourself on the investment side of things, but I just think there's so many other things that you're going to have to do to keep your clients happy, otherwise they're going to find it somewhere else. And I think that's what happens to advisors is not just that their fees come down, but maybe their margins come down because they have to offer or services. Insurance is not a bad thing. I have insurance. I think everybody who has a family needs life insurance. But people like myself get turned off that have seen how the sausage is made and the perverse sales incentives. Not everybody needs whole life insurance. In fact,

few people do people do need it. Anyway, that's a problem. We talk about this in the show that the biggest problem that people complain about is not the actual products themselves. It's pushing on people who don't need them or the incentive structure. So if you take away the incentive of structure, hopefully what's left over is just what people actually need it for. Again, I was incentivized and taught to sell life insurance to anybody that I spoke with. And if they didn't have money, then find the money in their 401k. They're a young person. They're only investing $1,500 a year into the 401k.

Well, take $500 of that and put it into a life insurance policy just to get them started. Like it was shit like that that I would just scratch my head and say, but why? Yeah. So on today's show, we talked with David Lau, who is the final. of a newish firm called DPL financial partners, they're working directly with RAs, and they decided what if we stripped away the commissions and the high sales charges, some of the penalty fees that you have to pay from annuities and insurance, and made it easier and made a platform just for advisors. I think this makes a lot of sense. I think technology is just making it so much

easier for these things, and they're all focusing on RAs. It makes a lot of sense, and we get into it David. I think this is a really good episode for advisors to understand this space who don't utilize this type of stuff now. So here's our conversation with David Lowe. We're joined today by David Lau, founder and CEO of DPL Financial Partners. First of all, David, thank you for coming on today. Thanks, Michael. Glad to be here. So for our audience who might not be familiar with you, your relatively new company,

I think a good place to start is just to introduce yourself, your company. Who are you guys? DPL financial partners. We're a turnkey insurance platform for RIAs. So we provide low-cost. commission-free insurance products, and we provide the technology and people to help implement it. In the two-and-half years we've been in market, and we've got a membership model, RIA firms join DPL as a member. We've signed up just over 1,100 RIA firms in

two and a half years, and we work with those firms as a strategic partner. We're not just a passive insurance desk you might call if you need an annuity exchange or something. As insurance is pretty new to a lot of RAA firms. They do planning, but they don't really know how to truly incorporate it into their practice. So we very actively engage with the firm to help them provide insurance solutions for their clients. What is it about your firm that has drawn so many RIAs to you already with this type of model? A number of things. So one, for the first time, you can get commission-free insurance. That's a big problem for RAs with insurance. Historically, insurance hasn't met their business model.

If you're a fee-only RIA, insurance is a conflict. You couldn't use an annuity, for example, or very few. I mean, you could use them from like my old firm, Jefferson National, but there was very few products available that you could use that fit your business model. So now, effectively, we enabled you to increase share of wallet with your existing clients, helping increase revenue, help you keep clients within your practice, your clients don't need to go to another advisor to find their insurance or get their insurance needs met. And if you're a financial planner, which most firms provide planning services today,

you don't want to write that prescription for insurance and then send your client to a competitor to go get it fulfilled. So I think from a business point of view, we're a really compelling business offering. And then from the client point of view, because we're providing low cost commission free products, they're getting tremendous value in the products we provide. So it's a pretty compelling, no-brainer kind of proposition for an RAA firm. So advisors pay you to be on the platform. Is that correct? To become a member.

Yep. That's correct. So advisor, what is that? Like an annual fee? Correct. An annual fee. So advisors pay you to be on the platform. If they need a life insurance policy or an annuity, you'll work with them to describe

the fit. What are they looking for? And then you'll go out and find the most. competitive policy, the one that really fits the bill? Is that how it works? Yeah, basically. Again, we're going to be actively engaged with the firms we work with. So we provide education on how you want to think about using products. So let me back up. Most RIA firms who are doing planning, they kind of know the need for insurance or an insurance product like life or something like that. But they don't necessarily know a good product from a bad product or where to go. So what we do is

we've curated products and we help create products with insurance carriers. We bring them on platform because they've all got to be commission-free and low-cost and repriced. And then we work with firms to help them think about like, here's the kind of clients and situations you want to think about annuities. Here's the things that you might think about for life insurance or disability or long-term care. And then when they have those clients who have a need, we'll talk about the client situation and we'll find the most appropriate product. And we'll also do that leveraging technology.

So it's not up to like an individual salesperson trying to sell you a policy. We've built proprietary technology, which helps find the best products given a client's scenario. Insurance payout certainly on the first year can be upwards of 50% sometimes higher. Oh, a lot higher. Yeah, for life. To the agent. So where do those cost savings, do they just lower the premium? Like, does that just disappear?

What happens there? Basically. So I mean, so when you look at a permanent, and you know, you're talking about permanent life traditionally, where permanent life insurance policies, seeing excess of 100% of the first year premium get paid out in the commission oftentimes, typically around 80, we say. So if you take that out, so if you had $10,000 that we're going to go fund, I'll make it up, a million dollar life insurance policy, $10,000 in the first year, it would cost you $2,000 to get that same amount of coverage with a commission-free product.

or for that same 10, you could get a lot more coverage. You simply eliminate that cost within the product. You see the same kind of things within annuities. Within annuities, you've got big commissions that are baked into the pricing. You've got sales contests and wholesalers and all kinds of things you've got to pay for on the distribution. And when you can eliminate all of those things, you're dramatically lowering the cost of the product. And how are we able to do this? How are you able to take those commissions out or lower the products?

How are you getting these products made? We work with carriers throughout the industry in order to do that. We started building DPL first. I was the chief operating officer at Jefferson National, if you're familiar with Jefferson National. So I built Jefferson National from the ground up on this notion that we're eliminating the commission to provide better consumer value. So based on my decade of doing that, built up enough of a reputation within the insurance

industry that I started DPL financial partners by consulting for carriers. Here's how you work with fee-based products. Here's how you build them. Here are the compliance issues, the technology requirements for working in the RAA space, all in preparation for being able to launch DPL. So I spent a couple of years doing that, put together a platform of about six carriers with, I think, 12, 14 different products as we launched two and a half. years ago. Over the course of that time, we continue to work with carriers. We don't do it on a

consulting basis anymore, but we continue to work with carriers to bring more products to market. We've got about 20 carriers and 45, 50 products at this point in time and continue to onboard more all the time. Right now, I mean, we actively get sought out by carriers looking to get into the RAA market. They want to know how to do it. We can help them. Do insurance companies like what you're doing? I mean, I guess they're still writing the insurance. So why do they care how it's distributed? I mean, are they loyal to their agents or how do they view you? It's a problem, right? So one of the reasons I started DPL is if you just look at financial services in general, everybody's moving to fee-based. Everything's fee-based, right? I mean, mutual funds long

ago started moving dramatically away from load to no-load. The whole advisory market, everybody's going fee-based. It used to only be the RIAs were fee-only. Now every broker-dealer rep of meaning, every wirehouse advisor, they all bill assets on fees. So if you look at the major categories of product, insurance is the last bastion of commission-driven distribution. And the highest. And the highest, which gets to your question there, Michael, it's a problem to get people who've gotten addicted to those commissions moved away from them. But the notion was, can we build a marketplace of commission free annuities and be able to distribute them? And let's do it through the RA channel. That's got lots of benefits, and I'll get to your question, but it's got lots of benefits for the consumer

because you're bringing much lower cost products to them, and then you're getting fiduciary implementation. You don't have a salesperson implementing a point solution. You're getting a fiduciary implementation within the context of your portfolio and your financial plan. So we think that's a much better outcome in general for clients. And then as far as carriers go, there are definite advantages to our model. They've got a lower cost of capital, while they're going to recoup that commission over time through higher fees, they don't have to pay it out up front. So they've got a lower cost of capital in a fee-based or a commission-free product. And then also, there's less of a liability. Again, they're getting fiduciary implementation of

the product. They don't have a salesperson potentially selling an inappropriate product to a client who didn't need it or had a bad client experience. So they've got lower liability relative to their traditional markets, but at the same time, that's where they're bread sputtered, right? I mean, that's still where all the distribution is, so they're sensitive to it. Obviously, these in the past are looked at as products that are sold, not bought. So is there a lot of education involved or the RA is coming to you and saying this is exactly what we want, see if you can find it for us, or is it more that they're saying, we have some clients with some needs, help us figure out what they need?

It's not quite the beginning. I mean, this wasn't like a business where you build it and they will come. One of the biggest hurdles we have is getting RAAs over the biases and preconceived notions about insurance and annuities, et cetera. So it really takes some education about what does a repriced annuity look like? It's actually a really compelling product. RAs would never use permanent life in the past. It would just say, let's just buy term, invest the rest.

But actually, a permanent insurance policy isn't really interesting tool when you take the commission out. And especially for estate planning issues. Correct. Exactly. So when you eliminate the commission, you're making these products another tool in the tool belt for an RIA. And many aren't very familiar. One of the big misconceptions we always run into on annuities, everybody thinks you need to annuitize to generate income because that's what most of the academic research is written about.

RIAs, if they're ever going to use an annuity, it would probably be a spia. But as a matter of fact, I mean, almost nobody uses annuitization to generate income. That's a single premium immediate annuity? Yes, I'm sorry. Using lingo, I know I shouldn't do that. Yes, single premium immediate annuity. And those get rarely used. Most of the time, income is generated through a rider.

And there's huge advantage in that because you don't have to annuitize. When you annuitize, that's when you're turning assets over to the carrier and receiving the payment. The risk is what? Premature death? That would be with annuitization. Sure, sure. When you generate income through a rider, not only can you guarantee a lifetime income stream, just like you do with annuitization, but you have access to the account balance until it's been depleted by the payouts. You're paying a fee with a rider, so you're getting for that optionality and liquidity. But the need to have to anuitize is a huge barrier for both advisor and client. But the value of lifetime income is completely. completely compelling. If you want to pay a little something to get that, that's a trade off most people are willing to make. That's one of the things. When you hear people complain about annuities, especially in the advisor space, it's more about the lack of liquidity, the high fees, the amount of money that people are getting on commissions. They don't really complain about the fact that you could give someone lifetime income. That's the benefit, obviously, right? But you

never get to that point with advisors who are talking about these because all the other stuff comes first. So if you're able to get rid of all that bad stuff, that whatever's left over is potentially useful for at least some clients? It's extremely useful for many clients. Again, when you look at all the issues, many of them, Ben, you mentioned, you can tie them all back to commissions, lack of liquidity, big surrender periods and fees. Why do they have that? Because you need to recoup the commission. Why are the fees so high? Well, because the commission's built in. Why do you get bad sales practices? Well, because the commission. All of those things that are the perceived negatives, you can tie back to the commission. And then, again, when you take

the commission out, now the product has got more applications than you might think. For example, a variable annuity, any annuity, one of the big benefits, tax deferral. Tax deferral is a great benefit during accumulation, but if it costs you 150 basis points to get it, then it's not worth anything. So, I mean, it doesn't have infinite value. But if you can get that additional tax deferral for your high income earners who are maxing out 401Ks and IRAs for 20 basis points, that's a pretty interesting product. Do you think that what you're doing can potentially change the distribution model in terms of what insurance agents are doing?

It's inevitable because insurance has to go as an industry, has to modernize and has to meet the advisory business model. Like I was saying earlier, the advisory business model has gone to fee-based business model, whether it's fee-only in RIA or fee-based. A lot of times, fee-based advisors are only fee-based because they're a new. or their insurance is commissioned. So I think the advisory market wants it to go that way. And it's better for consumers. It's better for compliance. It's better for best interest. There's no reason that it won't go. It's really inevitable. It's just a matter of speed. For those advisors who aren't

as familiar with life insurance products or haven't used them for clients as much, what are some of the biggest misunderstandings you think there are in that ways they can be useful for helping clients that maybe some RAs don't know about? Ben, you're probably talking mostly about like permanent insurance types. Everybody uses term permanent insurance can provide the biggest benefit apart from the death benefit, which can be used for estate planning, as Michael was saying earlier, is that you get tax-free income. And again, with a low-cost product, you know, in a VUL, a variable universal life, many people can look at that as something like a Roth IRA with a life insurance policy attached to it. And the expenses, of course, of the life insurance come out of that

policy. But again, it gives you some interesting possibilities for a product. But the primary benefit is tax-deferred accumulation and tax-free income out of the products later in life. I think that permanent insurance from an investment point of view, it's probably one of the last buckets that you should fund, in my opinion. But one of the other non-monetary benefits is let's say that you do want to leave your children some money and you're getting later in life. It allows you to spend every dollar that you have. Yes. Which is huge, in my opinion. Right. A great behavioral benefit having a policy like that. Because, again, if you're a retiree, one of the problems you have, or many retirees have, is spending their money because they're worried about whether it's the legacy, as you're pointing out, or being able to fund their life in indefinite period of time. People worry about overspending and running out of money. And that's a behavioral benefit annuities provide as well. Wade Fowell talks about that a lot. Give somebody a licensed, to spend because they know that they've got that secure income for their life, apart from the

economic benefits, there are many psychological, behavioral benefits that come along with insurance 10 months ago, right? When the pandemic first hit and the markets are going crazy and for the most part down dramatically, what was the advice that most of our firms are giving their clients? Stay the course, right? And that's good advice. Stay the course. Don't be selling out of your equities on a free fall on the way down. It's going to be okay. Well, for people who have their income guaranteed in retirement, it's a lot easier to stay the course. I'm not worried about the equity market so much because it's going to be critical to funding my retirement. If I've got my retirement spending funded between Social Security and an annuity,

for example, it's a heck of a lot easier for me to listen to that advice to stay the course in the equity market because that's just discretionary spending. That's legacy money. I don't panic as much about that. So obviously the insurance companies are taking this money and investing it on behalf of their investors and then they're pooling it and taking the risks into mind. So obviously, they're dealing with the same rates everyone else is. So how much do the rates impact the payouts you're getting on annuities these days? What does the typical spread look like that over time? I've always been curious if there is like a rule of thumb in terms of the spread that you get on something like that. I don't know if there's a rule of thumb. I mean, I'll start with that part of

the question first. So I mean, it's carrier to carrier, if that's what you're asking. They're investing. look at fixed annuity or a fixed product, a fixed index annuity, anything that's a basis of fixed, the yield of that is going to be generated against fixed income. So during the accumulation phase, so in a fixed annuity, it's all about accumulation because nobody's going to annuitize that. You've got that accumulation phase. So it works just like a CD. They're investing the money. They're earning a yield against it, taking their spread and paying it out in terms of a rate. the spread can depend carrier to carrier. But the advantage they have in investing that money is scale.

If you're looking at typical insurance carrier, their balance sheet is tens of billions, if not into hundreds of billions of dollars, which gives them tremendous scale. To do what with? To invest those assets into fixed income. So they're investing in their balance sheet into fixed income. Typically, they're going to do a really good job of generating yield out of a fixed income investment because they've got tremendous scale and they can hold assets to duration because they don't have to sell in a fixed annuity or a multi-year guaranteed annuity where maybe you have a five-year

duration. They can invest to a five-year instrument. They're going to get and they're going to be able to hold those assets to duration, which is an advantage. With a tenure at one and change, you're not going to get a 7% fixed payout, right? You might. If you look at our products right now in a fixed indexed annuity, which is the most popular product type with RIAs right now. The fixed account, so when you're investing during the accumulation aspect, you've got two investment options. You've got a fixed account. Our fixed accounts are paying two and a half, 2.75%, which is a great fixed income yield

right now. When you get to the income period, when you're going to turn on the guaranteed income, like through the rider, depending on your age, and often, times when you open the product, your payout rate's going to be 5, 6, 7 percent, even occasionally more if you've opened up the account early enough. We've got some policies that they kind of work like Social Security, where you get what's called deferral credits. You open the policy at age 50, you wait until you're 65 to turn on the income, and every year you're getting an additional 15, sometimes 25 basis points in yield added to that lifetime

and payout. The downside there, obviously, is if you have this chunk of money, you can't take it out if you're going to buy a house or something like that. But to your point, I think what a lot of gets missed in the nuance of this is people who have sold insurance products, I've always told you almost 100% of your money has to be in this. When you're working with an RIA, they can say, no, you have a diversified portfolio, and then you have a piece in something like this. And I think that's probably the discussion that gets missed when you're talking about people selling them for commissions that they want all your money. Because an RIA can look at it as a one piece of the toolbox that can help you out.

Absolutely. One of the questions we get asked most commonly when we're working with an RIA with a client, how much do I need to allocate to this? We're going to answer that question with the typical insurance agent's going to say, well, how much can you afford to put in it? That's not the way we want to go with that. Questions, what are you trying to do? How much income are you looking to fund, for example? So let's say your client needs $10,000 a month in income and they're going to get five from Social Security. so they need another $5,000 in guaranteed income to fund their essential expenses. We've got technology that will look across all the different annuities that we provide and find the one that will fund that $5,000 income amount for the least amount of premium. You can back into it in that way.

You say, okay, you need $5,000 a month. Here's the most efficient annuity to do that, and that's going to cost you whatever, $250,000 allocated to it. And again, it's just a portion. Obviously, there's a huge need in the marketplace for this, and the proof is in the pudding. You guys were adding two new RAs to your member base per day in 2020. How are you dealing with this growth? Any growing pains?

Like, what sort of support staff do you have going on for new advisors? It was easy. We definitely added a lot of support staff, and we were fortunate enough to have enough capital in order to do that and prepare for the growth. We've got about a little over 60 employees now. We started off again in 2018 with four of us. We're up to, I think it's last count, 62 employees, although I think we're onboarding a couple new ones today.

So not only do we have the employees and the infrastructure to support it, and I think you guys may have seen we've just raised $26 million in capital, which will continue to help fund that growth, we provide technology, and technology also provides efficiency. So whether it's efficiency for us or advisors, we, We've got technology that we've built, proprietary technology that's going to help find products, find the most efficient products, whether it's guaranteed income or a fixed income replacement, or you want to do an annuity comparison. One of the newest tools we just introduced about 10 days ago, our annuity comparison calculator,

which is an incredible tool. We model within that calculator pretty much every annuity and every rider that's ever been sold. And if you want to compare any two annuities, you can do that. So if you're an RIA and you've got clients, you've got held away annuities that somebody sold them, we can compare that annuity to the annuities that we provide and show whether there's a benefit for your client and moving that. As you grow and scale and competition increases for these providers, will that eventually lower the cost that they're charging as well or the premiums because you're able to show people the difference and that maybe makes more competition among insurance providers? We see that already. We see that

already, right? I mean, on a smaller scale than ultimately, I think it gets to. But I mean, because we utilize technology and analytics in order to do product selection, we might have a carrier who's saying, how come I'm not getting volume into my product? Well, it's not price competitive right now. If you increase your interest rates or your payout rate, then it might compare more favorably. We try not to bring on any carriers or products that we don't think have a particular spot or fit a particular need in a better way than others. But I think ultimately, as more annuity distribution and insurance distribution goes to a model like this, fiduciary implementation, so you care about price, you care about the value. And it's done through technology

and analytics, not through salesmanship. I mean, you're going to see the pressure to be more price competitive. Are you handling pretty much all of the back office stuff? How much of this is taken off the advisor's plate. And what about things like, I mean, just paperwork applications? How does that process work? Yeah, we're completely turned key. So we're going to help alleviate much of that pain. We're the agent of record. So if you're an RIA who hasn't been insurance license, because why would you be if you couldn't use the products? We're insurance license. We're going to be the agent of record on it. We will concierge the paperwork and see the application process through. One of the things that we're doing that's going to help everybody,

through that is with our technology builds, we're integrating into RAA platforms so that we can start pre-populating applications with client data, you know, to start alleviating that pain. We announced a big deal with SS&C Advent last year, right at the end of September. We're providing the Advent insurance marketplace powered by DPL. Through that technology, we'll be the insurance technology for Black Diamond and some other advent platforms. So this is going to be integrated with a lot of the financial planning software? Correct. So not only the planning, but portfolio management and portfolio construction. So if you think about, like from the business point of view, as I was building DPL, how do you

solve the problem of making insurance usable and accessible to RIAs? You have to start with product. So you've got to get commission-free product that fits the business model. Next, you have to start getting integrated into the desktop. So at least you need to start getting data feeds from all those products into a portfolio management system so they can be seen with the rest of the portfolio, build on the rest of the portfolio. So it becomes a revenue source for the RAA. But next, you really want to have functionality embedded into the RAA's workstation, into the desktop. So that requires our technology build and getting it embedded into the desktop. So it becomes, fully usable in an integrated, seamless way for an RIA. And it's not just this held-away asset

that you can't see, that you can't bill on, that isn't part of your normal business and your core function. Any other products that would be on your wish list that you could do in a platform like this, or is it more just streamlining the process that you have now and getting more of these insurance products and annuities to RAs? When we launched, the goal was, let's check the box in terms of product category for what I think are the four major product types that an RAA or a financial planner is going to address. That's life insurance, long-term care, disability, and annuities, lifetime income. Those are typically the product categories.

So we launched last year, the first ever commission-free disability product through principle. That checked our last box. We've got a hybrid long-term care product. that we designed, that we launched with Salmon's Midland earlier last year. And so that checked all four category boxes to us. So we want to continue to augment within those product categories with more product, more competition, more competitive products. In terms of categories, we've got some requests for a few different types of products, but that will stick, you know, we'll pretty

much stick there. Medicare supplement is one we get asked about a lot. It's a little complicated to get that built because it's state by state, but anyhow, we'll continue to bring more products within those four primary categories to market. All right. This is excellent. David, is there anything else that we missed that you wanted to hit on? One of the things that, because we get asked about a lot, is how does it work within an RIA's practice?

Usually the first question we get asked by an RIA, two things. How do I get paid and how do you get paid? If it's commission free, and it's typically for the RIA, this is AUM. with anything that's got cash value, whether it's an annuity or a permanent life policy, it's AUM. For other products like disability or long-term care or you're doing term life, something like that, it's typically just part of the planning fee. That's what we see. And then for us, we're providing an insurance platform, you know, an insurance desk for the insurance carriers. So they pay us an administrative fee in order to create that. So when I was at Jefferson National,

Again, solving for the problem for the RAA, they probably don't have an insurance licensed individual there. You need to have that insurance license individual. You need to have the broker-dealer. You need to have some infrastructure to issue these policies. We built it at Jefferson National internally so RAs could just use it directly through us. Most carriers don't do that. Most carriers don't support RAs directly. We kind of basically outsource that service to them for which they pay us an admin fee.

And that admin fee is typically about 10th of what a typical commission would be. So that's where the pricing advantage comes in for the end consumer. So does the RIA pay you a flat fee or do they pay you a fee? And then there's a fee per user, say. Just a flat annual fee by AUM. And we think it's pretty minimal for a small advisory shop under $100 million. It's $1,000 a year for the whole firm, large shops. over a billion dollars, it's $5,000 for the whole firm. And we do that mostly because we want to

make sure people are serious, because we're going to, again, proactively work with the firm to help them incorporate insurance into their practice. So we want to make sure they're serious about doing that as well. So 1,100 RAs on the platform, sounds like you've covered 10% in the marketplace, which is pretty impressive considering how new you are. They're all 1100 of those, like, active customers? I would say no. So not all of them. have been implementing product yet. Most, yes, but not all. And I would say that's kind of an evolution of the market. It's like you've given somebody a new tool. They have to figure out how to use it. And we try to do that, both through the technology and the education we provide. But frankly,

the products get underutilized. The big thing we want from an RIA is consideration. We're not pushing annuities, but we're saying you need to consider them. You need to actually look at them. Don't be dismissive because of in the past they were expensive and complex and all that nonsense. These are different products. Let's, with an open mind, consider them and look at them, and you'd be surprised at the power of the product between the tax deferred accumulation and the value of lifetime income, which gets enhanced by mortality credits and risk pooling. This is a new tool, which really needs to be evaluated and looked at.

And then as one of our advisors that we work with, a woman named Shannon Stone out of California, when she describes it, she's like, annuities aren't macho. We work in a male-driven industry when you're dealing with people who've been asset managers for most of their career to think about turning over a portion of fixed income to be managed by an insurance carrier and into an annuity can be a little bit like, hey, I can manage fixed income better than the insurance carrier. You tell me that annuities are not going to the moon? Is that the deal?

Good on, Ben. That's a good place to leave it. David, thank you so much for coming on. DPL financial partners. We'll link to everything in the notes. Thanks again. Thanks, Michael. Thanks, Ben.

Appreciate you having me. It was great fun. All right. Thanks again to David for coming on the show today. Again, everything will be in the show notes if you're interested in finding out more about them. Animal Spiritspod at gmail.com. for listening and we will see you next time.