Annuity integration initiative could help advisors build ‘superior client engagement’

By Rayne Morgan

Financial advisors could soon benefit from simpler integration of annuities in their professional tools if the Insured Retirement Institute is successful in its bid to develop a new digital, standardized infrastructure.

IRI’s Digital First for Annuities is an industry-wide annuity integration initiative that aims to introduce a single, consistent source of product data and new infrastructure for standards.

“We are trying to create an infrastructure that enables seamless real-time integrations, connected experiences and consistent data wherever annuities need to be represented,” Katherine Dease, chief technology and innovation officer, IRI, said.

She noted that annuities are not easily pulled into the tools financial advisors use right now because of inconsistent or missing data, which can cause the annuity to be inaccurately represented within a portfolio. According to IRI’s data, while 83% of financial professionals use financial planning software, just 18% leverage annuities in those tools.

However, the Digital First for Annuities annuity integration initiative would address a lack of standardization and ensure the value of annuities is accurately represented in a way that works both for financial professionals and their clients.

“By creating a standard, firms that want to build superior engagement for the consumer and financial professional can do it without a one-off implementation per carrier and per product. For the financial professional, this work will enable annuities to be more easily integrated into financial professionals’ tools,” Dease said.

Digital transformation

Once fully launched, the Digital First for Annuities initiative is expected to create an “ecosystem where annuities are consistently represented alongside traditional investments.” IRI hopes this would put them on “equal footing” with other investment choices and enable advisors to more easily demonstrate how they may align with clients’ financial goals.

IRI is working with three of the largest financial platforms as it begins to roll out related changes, such as incorporating vendors’ planning tools with:

● Improved education about annuity products
● Streamlined annuity workflows
● New embedded visuals that show the value of the annuity, simulations, calculations, cash flow reports, etc.

IRI members are also adopting initial standards developed in collaboration with ACORD to enable real-time tracking of annuity application statuses, improve transparency with ready-to-sell statuses and reduce manual error-prone processes involving transfers, exchanges or replacement business.

Additionally, they are using solutions such as carrier-to-carrier attachments and money settlement services to make the annuity process more efficient, cutting transfer issuance time by as much as 60%. Dease said that turnaround time could drop even lower to just one day as of September, once paperless transfer automation begins.

IRI leading the charge

IRI has spent the last two years investing resources and personnel and working with collaborators to launch this initiative. Dease noted that while individual firms have attempted something similar in the past, industry-wide buy-in is necessary if it is to be successful. IRI believes it is in a position to facilitate that.

“Our members decided that IRI was uniquely qualified to lead this transformation because we represent the entire value chain of the insured retirement industry,” Dease said. “The largest distribution, carriers and solution providers are aligned with the vision and are excited about our future.”

She said IRI must show the value of the work done to get to this point in order to get the entire industry to implement the new infrastructure.

“We are doing this work very pragmatically with market research, planning, alignment and then a small proof of concept to implement and measure the success,” Dease said. “Once we show that we can achieve the desired outcomes, we can formulate a solid long-term plan for adoption.”

In the meantime, IRI has issued a request for information by August 2.

Long-term benefits

A standardized annuities infrastructure would have benefits for the insurance industry across the board as well as for individual advisors who sell annuities, Dease said.

“Every firm, every size, and even broader than just the traditional annuity market can benefit from our work,” she said. “Once the annuity data is easy to pull into tools in a consistent way, firms will be able to build superior engagement. If they can imagine it, the data will be there to support it.”

While she acknowledged that not every firm will be ready to implement IRI’s new annuities infrastructure right away, Dease said the process will eventually lead to a “long-term transformation of the annuity experience.”

“We are on the brink of major changes to how annuities are researched, transacted and managed,” she said. “These changes will have significant, positive effects on the retirement planning options and strategies offered by financial professionals to their clients, who desire and need protected lifetime income solutions and portfolio protection options to help them achieve a financially secure retirement.”

IRI, founded in 1991, is a trade association that provides consumer education and advocates for policies that support retirement security. Their members encompass 90% of annuity assets in the United States.

Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].