Creating the Preeminent Partnership — With Simplicity’s Bruce Donaldson

The genie is out of the bottle when it comes to the marriage of protection and accumulation in providing true holistic financial planning, says Bruce Donaldson, partner and CEO of the Simplicity Group, a leading financial products distribution firm.

Since its formation in 2016, Simplicity has continued to build its success through a series of acquisitions, improving its One Simplicity platform for agents and advisors and, more recently, enabling further reach into the wealth-building side of the business.

“We all know that there is a better way to hedge longevity risk and only one way to address mortality risk — and that’s with insurance products. That simple principle has always been at the heart of Simplicity,” said Donaldson. “The trick is properly marrying the best accumulation products with the best protection products in a way that helps clients meet all their key financial objectives.” 

Donaldson said the way Simplicity has accomplished this goal is by creating a tech-enabled sales process, driven by consumer needs, that delivers the best of accumulation and protection for each consumer. “We’ve seen double-digit organic growth for the past four years exactly because we’re penetrating markets that used to be the preserve of the ‘fee-only’ advisor.”

In this interview with InsuranceNewsNet Publisher Paul Feldman, Donaldson describes why he thinks “the best days for the insurance industry are ahead of us” and how it will be incumbent on those in the insurance profession to embrace the accumulation side of the business.  

Paul Feldman: You’ve had an amazing run in this industry. How did you get involved in it? Tell us about how you started with Simplicity.

Bruce Donaldson: I’ve been lucky enough to be in and around financial planning and financial advisory for almost 35 years now. So many of the things that we’re doing at Simplicity, I’ve learned along the way through the course of my career.

Before starting Simplicity as an insurance sales organization — which has evolved into a financial products distribution business — I built an institutional asset management business and then started a new insurance company. In 2016, I saw an opportunity to build a business to better serve independent insurance agents and financial advisors across the country as they dealt with an ever-shifting landscape of technological needs, increasing consumer demands and, frankly, misguided regulatory oversight proposals.

Today, I serve as a proxy for our 250-plus employee-owners — “partners” — of Simplicity and the 1,000-plus employees we have across the country. I’m thrilled to be a partner at Simplicity. 

Feldman: Tell us how Simplicity started.

Donaldson: Tracing our roots back to our formation in April 2016, you will recall that we had an uncertain economic environment; we had a highly fragmented insurance distribution industry; and we had regulatory overreach concerns. Our belief was that a national wholesale platform could properly support all the great insurance agents and financial advisors across the country.

Simplicity was founded on the idea that the American consumer was not being sufficiently served with the appropriate protection products as a complement to their accumulation investments. We felt that businesses in adjacent industries (the fee-only advisors) avoided insurance or openly advised against it (the “we don’t sell commissionable products” mantra). Many of these very same advisors hold themselves out as “fiduciaries,” but when addressing a client’s longevity risk, what they were really doing was just recommending a higher-yielding security and/or slowing down retirement withdrawals. We know that protection products are the right way to address these objectives. Not selling insurance to address protection needs is almost the definition of not acting in a fiduciary or best interest manner. I find this ironic given how Washington has been fixated bringing “regulatory parity” to our industry without addressing this issue.

Today, Simplicity is 100% committed to working with our independent agents and advisors and supporting financial institutions across the country that see the benefits of outsourcing to an unrivaled national sales platform. We’re not a direct-to-consumer model as some of our competitors are. Our goal is to work with all our agents and advisors to increase the delivery of insurance products with a growth rate that equals or exceeds what we see in the securities industry.

Feldman: Tell us how Simplicity is addressing this “underinsured” issue.

Donaldson: We all know that there is a better way to hedge longevity risk and only one way to address mortality risk. That’s with insurance products. This principle has always been at the heart of Simplicity: great insurance distribution, a 100% commitment to supporting independent agents and advisors across the country, and  building the One Simplicity platform to grow our industry. 

By positioning our protection products as a part of a broader a financial plan, we can focus on the hallmark of pooled risk mitigation that no other financial product can replicate. We then combine that solution with an easier issuance process that our scale affords us. Over time, we believe that by focusing the sale of insurance on the hallmarks of protection and by reducing the friction of policy issuance, we can change the misperception of insurance and grow the protection market.

Feldman: Tell me about the most recent investment in your organization. What does that mean to your advisors and partners?

Donaldson: We recently announced that we have again recapitalized our business. This is the third capital event that we have provided over the past eight years. These capital events reinforce our employee-ownership model, and they provide new capital to invest in operations and technology to better serve our agents.

Simplicity has been, and will always be, committed to employee-ownership. We are driven by our employees and therefore think the value that we are creating with Simplicity must be available to our employees. A commitment to employee-ownership was critical to how we started and will always be central to how we operate.

We have 1,000-plus employees across the country. Each of them is in a different stage of their own personal financial planning. Some of our partners are a little closer to the end of their careers, and they are thinking about succession and liquidity. Some of our employees are in the growth phase of their careers, and they really appreciate our unrivaled growth equity opportunity. Some of our employees are just appreciative of Simplicity’s permanence and consistent growth. What binds us all together, however, is the employee-ownership mentality — a distinguishing hallmark of Simplicity. Interestingly, this employee journey is one of the many things Simplicity helps our agents and advisors navigate in their own businesses, and we tell them “There is no substitute for employee-ownership.”

We believe that to properly instill the employee-ownership mentality, businesses must have regular liquidity events. Of the Big Three distribution businesses, we are the first to deliver multiples of invested equity capital back to all of our partners, and because we do this every three or four years, we’ve created the virtuous circle of increasing employee-ownership.

As our older partners execute their succession plans, we then recycle their equity, which becomes available to the younger, newer employees in our organization who haven’t yet had their wealth creation opportunity. They know that not only does Simplicity offers a great platform to grow their day-to-day sales and generate a great regular income, but they also get to experience the benefits of employee-ownership.

That has been our model. That will always be our model. We love that equity in Simplicity becomes a virtuous circle for us to recruit and retain financial professionals. We can recruit through employment, through independent agent affiliation or through [mergers and acquisitions], but we want the best and brightest financial professionals across the industry to hitch their wagon to Simplicity, and we’ll help them experience a great outcome like this most recent recapitalization.

Feldman: In 2024, you didn’t have as many M&A events as you’ve had previously, from what I’ve seen. How does that differ for next year and the future?

Donaldson: Executing a multibilliondollar recapitalization required several months of time and attention, and we needed to lock down our balance sheet for a period. Now that we have successfully recapped, we are back to full speed from an M&A perspective. As happened the last time (the 2020 recap), we expect that our 2024 recap will lead to more partners looking to join Simplicity because they know we offer an unrivaled equity and growth opportunity, and we expect a big uptick in both our M&A and our affiliation model.

We are always in the market, and we are always looking for great partners.

Feldman: How have you reinvested some of the recapitalization in technology? Where do you see technology going?

Donaldson: I would say, in an industry that is lagging in some ways on technological developments, we have a somewhat easier path than other national players, in the sense that we are exclusively focused on financial planning. 

We are not trying to bring together health and wealth. We have the ability to solve health needs, but the One Simplicity platform is all around tech enabling that one operating platform.

The latest example of our focus is Simplicity LifeLink, the newest life insurance quoting tool that, unlike other technologies, was purpose-built to support independent agents. This technology is not a recycled direct-to-consumer technology. Simplicity LifeLink was built with independent agents in mind. 

Everything we are doing from a technology perspective is focused on removing friction from policy issuance. Our agents never have to wonder, If I embrace this technology, am I facing disintermediation? We are committed to the long-term business of our independent agent clients. 

Another example of our technology focus is ILIA, which is the technology behind Kai-Zen, a supplemental retirement savings program that is gaining popularity across the country. We will continue to invest our refreshed capital into growing this industry.

Feldman: You have discussed recapitalizations, technology investments, and mergers and acquisitions; how should the insurance industry think about these aspects of your business? Do these things help our industry?

Donaldson: It is a fair question to ask: If we’re in the insurance industry, why are we investing time and resources in the wealth management industry? And frankly, it is fair to ask whether all the recent M&A deals are good for the insurance distribution industry. If executed in a sustainable way (which we believe we have done), then the platform size we gain from M&A should bring all market participants the benefits of our scale. We have seen these benefits be realized by both our agent base and also our insurance carrier partners. We are knocking down the walls and removing the friction that has historically kept Americans underinsured. In this regard, we think recapitalizations and M&A have brought a lot of positives to the insurance industry. 

Having said that, we think the insurance industry has to find a way to push into new markets to drive overall growth. This is not a novel thought. The industry has been trying to do this for decades. We do think, however, Simplicity’s One Simplicity approach to growing insurance by penetrating the wealth markets is what gives us optimism that we can grow the insurance market. Our One Simplicity platform integrates, or “marries,” the best of protection with accumulation and brings our products into new markets. 

At Simplicity, we do not think our competition is in the insurance industry — we think the competition is in the new markets we are trying to penetrate. We also don’t spend time thinking about where we sit relative to other insurance distribution organizations. We spend all our time thinking about how we can grow the overall market and capture more wallet share, by helping our agents and advisors capture more wallet share from their consumers. The only way to do that is to have wealth services and programs that those consumers can tap into.

The trick is, can you bring all those accumulation products and marry them with the protection products? And the way we’ve done that is by creating a straight-through, tech-enabled sales process driven by consumer needs that delivers the best of accumulation and protection for that consumer.

We’ve seen double-digit organic growth for the past four years exactly because we’re penetrating new markets.

Feldman: Tell us how you are combining accumulation and protection for advisors. Are you helping them get registered?

Donaldson: We help our agents with all the regulatory requirements, but we have a number of different ways we can help agents penetrate new markets. If an agent says, “I’m never going to get my Series 65, but I want to be able to work on a platform that allows me to refer to appropriate securities advice,” we can deliver that solution in a compliant way.

But the heart of your question, because it applies equally to the insurance industry and to the securities industry, is how do we put agents and advisors in a position where they feel empowered to deliver the best of those two worlds? Because almost without exception, all those agents and advisors — whether they’re in the insurance industry or the securities industry — grew up in one world and not the other.

We have built easy-to-understand client education programs, and we provide agent training that makes our agents expert in the marriage of accumulation and protection. After the first client meeting, our agents gather the pre-identified key client information and then send the information to our planning department. What comes back to that agent is a fully built-out, uniform financial plan that leverages these two product types, accumulation and protection. Now the agent is in a great position because they can capture 100% wallet share. They look smart. They educated their clients and delivered a plan that meets the clients’ pre-identified goals. At the final client onboarding meeting and annual reviews, our agents are delivering a fully integrated plan — it is not like the old days of stapling an annuity policy or a life policy to a securities portfolio printout.

Feldman: What advice would you give to an agent who is selling universal life and wants to get into the wealth side of the business?

Donaldson: First, their clients are on the wealth side of the business. Second, if done correctly, just like selling a UL policy or a fixed indexed annuity, the approach no longer involves trying to impress consumers with your mastery of all the complexities of the different products that we sell, those days are waning.

What we sell generally is more homogeneous than not. Every policy has different riders and different features. But at the end of the day, what will appeal to those consumers who want both accumulation and protection? You’re only talking to them about protection, and you need to address both worlds. And you need to do it in a way that’s simple and easy to understand.

Done well, financial planning should be simple and easy to understand. That doesn’t mean consumer challenges are simple. There are lots of complexities in life. But when you think about the inherent values of the products that we deliver, which you can only get with insurance companies — 100% mortality risk mitigation, 100% longevity risk mitigation — it makes capturing the wealth side much easier.

You are better educated as an insurance agent to start talking about mortality and longevity as part of a holistic financial plan. Your clients’ wealth advisors aren’t talking about mortality and longevity. Capturing those wealth assets is, frankly, not as complicated as some of the products and processes that they need to master to sell protection.

What you are doing as a part of that financial planning process is having the client fill out a financial planning consideration questionnaire that then feeds into a plan that gets delivered back to you. 

It’s something every agent and advisor needs to do because the world of distribution is continuing to come together. The distinctions between securities licenses and insurance licenses are going to wane over time. What consumers will really demand is great holistic financial planning. That’s where the world’s going.

This is the wave of the future, and Simplicity is driving the platform to meet those changes.

Feldman: With life insurance and, to some extent, with annuities, underwriting has been one of the biggest challenges. What are you doing at Simplicity to solve those challenges? 

Donaldson: With our size and scale, we have a fully built-out underwriting desk that our partners can tap in to the day they join Simplicity. The underwriting staff is expert at working with their carrier counterparts — to either work through particular issues on an individual application or engage in senior-level dialogue with carriers about a different perspective on the risk that they’re looking at.

I don’t think that underwriting will ever go away, but I think you will see the carriers become more sophisticated. From a tech perspective, they’ll become more streamlined. Good underwriting requires a human touch, just the same way good financial planning requires a human touch. What we want to do with our technology and our platform is enable efficiency and remove some of the friction so that the experts in our industry can better serve their clients.

Feldman: Where do you see this industry going in 2025 and beyond? 

Donaldson: I’ll give you a short-term answer and a long-term answer. 

Short term, I think there are legitimate concerns about the election that could impact our industry. If we look back to 2020 and political and electoral machinations that occurred, we remember that there was a period of uncertainty that slowed business. I don’t know if we will face the same level of uncertainty at the end of this year and moving into 2025. It is hard to predict, but this is one of the main reasons that we executed a recapitalization earlier this year. The recap validates and strengthens our business. Our agents and advisors, our financial institution clients, and our insurance carrier partners now know that Simplicity is especially well positioned to survive any year-end challenges. 

We are a perfect home for our agents and advisors who may themselves be facing uncertainty from a business perspective as we go through this election cycle. We can help them pivot their business, we can train them on new products, new processes. We can create efficiencies in their business to deal with any short-term challenges that may come up. So that’s my answer to the short term.

Long term, I think the election cycle is irrelevant to what I think will continue to happen. I think we have seen a sea change over the past 12 to 18 months on the value of protection products for our securities counterparts, banks, broker/dealers, RIAs, even those fee-only advisors.

They now understand — and I think it was the interest rate shock of March 2023, when FIAs were clearly a better bond alternative and MYGAs way outperformed CDs — that insurance products deliver unique protection benefits. 

The days of Ken Fisher banging the drum and trying to get everyone to look at commissions — ignoring the fact that fiduciary advice and sound holistic financial planning require the use of protection products — are going to wane. I think the best days of the protection market are ahead of us. It will be incumbent on us — those in the insurance profession — to embrace the accumulation side. We should not view accumulation as a threat. Instead, we should continue to invest in technology, to grow protection in what used to be exclusively accumulation turf and deliver the best planning, products and services to the American consumer.

I think that genie is out of the bottle. I’m excited about the prospects for our insurance industry. I think the best days are ahead, both for Simplicity and, more broadly, for the insurance industry.

Paul Feldman started the website InsuranceNewsNet in 1999, followed by InsuranceNewsNet Magazine in 2008. Paul was a third-generation insurance agent before venturing into the media business. Paul won the 2012 Integrated Marketing Award (IMA) for Lead Gen Initiative for his Truth about Agent Recruiting video and was the runner-up for IMA's Marketer of the Year, a competition that includes consumer and B2B publishing companies. Find out more about Paul at www.paulfeldman.com.