Financial Advisors

InsurTech Helps Advisors Reimagine Annuities & Life Sales

Selling insurance has always been a laborious time, paper and process intensive business that has been, per the industry’s nature, slow to innovate and employ cutting-edge technology. But that is starting to change, very rapidly.

While InsurTech might not grab headlines like other flashier FinTech sectors, based on Crunchbase data, 2019 saw the most venture capital dollars invested in InsurTech companies over the past five years. About $7.3 billion was invested in InsurTech over 548 deals. These InsurTech startups are bringing innovation across all aspects of the insurance value chain, including applying digital capabilities to transform customer’s experiences with insurance throughout their buying journeys.

To get a better sense of the new business architecture being built by InsurTech pioneers, the Institute reached out to Patrick Kelly, CEO and Co-Founder of Signal Advisors – an innovative InsurTech platform that redesigned annuity and life sales, and the distribution process, around insurance professionals. Coming from Kelly’s expansive background as a financial advisor at both a captive insurance company and a smaller independent advisory firm, as well as, helping build eApplication and financial planning software companies, he has seen the insurance and financial advisory space from almost every angle.

From this broad perspective, the most obvious issue and need Kelly saw was the lack of investment and innovation in the annuity and, more broadly, the insurance space. We were excited to learn how he went about creating change and a whole new business model for insurance sales.

Hortz: What were your motivations and goals that drove you to start Signal Advisors?

Kelly: The first thing I would say, what was the most clear to me and my partners in working with the traditional insurance sales process, was that the world did not need another IMO or FMO (independent distributors of insurance products). Advisors like ourselves needed insurance sales support, but we needed something fundamentally different. We committed to ourselves to build and design things that no other IMO had done before. There were a few major reasons for this.

These marketing/sales organizations have a common structure focused on: 1. insurance sales professionals or Marketers that were positioned to teach other insurance agents or advisors how to sell insurance to grow their business, but were not agents or advisors themselves; 2. Lots of good sales ideas and information but not making it more practice and execution-oriented since we were all still struggling to implement; and 3. a tremendous amount of paper and process.

I thought this sales experience cycle needed to be broken – it is just information overload. The bottleneck of improvement is not information, it is in execution; it is in taking information that’s going to yield the best results towards implementation. That insight surfaced rather easily once I started challenging the thinking and the process we had to labor through.

Building off of that, I thought, let's bring in different perspectives and change the way IMOs are started and constructed. Enter my co-founders Jacob Cohen, President, and Kevin O’Hara, CTO. Jake understands how to scale high-growth businesses after spending the past 10 years building technology companies as a venture capital investor. Kevin is a veteran software architect and technologist, most recently leading software development at Bluewater Technologies Group and LevelEleven. Bringing together the unique backgrounds of our founding team, we were able to create not only a superior coaching model to replace the traditional sales/marketing support teams, but also a best-in-class service offering and industry-leading technology that is truly designed for and differentiated in insurance distribution.

Hortz: What were the steps you took to start solving what you saw as major insurance industry problems?

Kelly: We first recognized that if we were really going to reinvent the IMO, we needed to reinvent the whole business model behind the IMO. Since the financial advisors’ space is nuanced and highly personalized and fragmented, before executing anything, we reached out to a wide range of respected individuals in the industry about our hypotheses to see how closely they lined up with our end user’s reality. The feedback we got overwhelmingly confirmed our thinking and ultimately informed the innovation steps we chose to take.

The first pillar of differentiation we wanted to bring to market was no marketers! For those of you not familiar, marketers are inside sales professionals at an IMO that typically have not been advisors themselves or are not currently. They have two core jobs, for which they get paid handsomely: recruit new advisors and train current advisors that have already been recruited. The first problem was that advisors are coached by these inside salespeople when they really would like to be coached by top performing advisors. The second problem on this issue we discovered in our research was that 20-50% of an IMO’s expenses go towards marketer compensation.

Our intuition was to replace marketers with top financial advisors who have better rapport with other advisors and who experientially know how to scale an advisor’s business. Not only does that give advisors the coaching they deserve; we designed the model to pay these top advisors to be coaches, so that is an entirely new revenue stream for them as well. Additionally, instead of paying marketers to aggressively recruit, we structured the process to rely on referrals, which forces us to build a better offering.

The second step we took was to solve the 120-day problem: from dollar spent on marketing to dollar made in commissions, it takes 120 days on average to see a return on investment. Since COVID, that has only worsened, with advisors waiting over 50% longer to get paid, at a time when they may need the money even sooner. Advisors rely on timely commissions so that they can turn around and reinvest in marketing. The slower the commission payment, the less marketing an advisor will be able to do this year.

To solve this, we knew we needed to build out entirely new technology to get advisors paid faster. We created proprietary commission management software combined with a new commission advance program, which we now call Truepay. The result - upon submitting a complete application for an annuity, which passes Signal’s suitability review, and with all of the proper signatures and paperwork - Signal Advisors will advance the estimated commission within hours. In most cases, we have been able to pay commissions within 24 hours. And we do not charge for it. It is a standard part of our offering.

The final major problem we identified was that advisors have myriad third parties that make their process disjointed and difficult to manage. We wanted to integrate all of those into one end-to-end platform to bridge the gap between each step in the business. Something I find so interesting about building tech for the insurance space is that many times you are not replacing incumbent software, you are creating something “net-new”. By creating a fully integrated platform, we have improved upon each aspect of the IMO business: licensing & contracting, new business submission, in force policy management, case design, marketing analytics, commission management and more.

Hortz: Why did you feel this redesign or reinvention of the Independent Marketing Organization structure was timely and most needed?

Kelly: When we looked at the financial advisory landscape, it was extremely obvious this IMO space had been neglected. There is $85 trillion in assets in the United States and only $300 billion in assets that go into annuities. The larger market attracts more investment dollars in more innovation. On the surface, that makes sense, however, when you peel back a layer and see what is happening with advisor and WealthTech in the RIA and Broker-dealer space vs. what is not happening in the insurance distribution space, the disparity is shocking! We really felt if we did not start this business and build technology for insurance agents who sell life insurance and annuities, no one would do it in a meaningful way.

Hortz: What kind of development process guided you in building out your platform and technology?

Kelly: We use an agile methodology when building software and operational processes. We feel that this approach allows us to stay closer to our end user, the independent financial advisor and insurance agent. When we started building Signal Advisors, we had several hypotheses, and our goal was to have the market tell us where we were wrong very quickly. This way we could get to the right answer and provide more value in how we were building our new solution, making sure that it matches up with our customers' reality as closely as possible. Investors and tech entrepreneurs would call that product-market fit! 

Hortz: How did you apply technology to overhaul the insurance industry’s way of doing business?

Kelly: First of all, 100% of applications are submitted electronically. This does not sound like a big deal on the surface, but since most IMOs have entrenched processes, they have continued to let some advisors submit new business through paper applications in the mail. I would estimate 50% of the industry’s new applications are being submitted via paper today. We built a simplified process where everything comes through our proprietary platform.

We were systematically rethinking the whole business, and we built technology behind each step in an advisor’s workflow to ensure an intuitive, efficient, end-to-end platform that completely reinvents how they do business.

Hortz: Can you explain more about your coaching component and how you structured it as a unique part of your overall value proposition?

Kelly: As a financial advisor and software entrepreneur, I spent about 10 years going to industry conferences and interacting with other financial advisors. One thing above all else was clear to me: the best way to grow your financial practice was to learn from the best in the business - the advisors who have already figured it out. The coaching program at Signal replaces marketers by taking advisors who are producing around $5 million in annual annuity production and pairs them with advisors who are producing around $30 million in annuity production. There are no more than 12 smaller advisors on a coach’s team (traditionally IMO marketers have at least 100 advisors contracted underneath them), ensuring each smaller advisor is getting personal attention. We have seen tremendous results already with advisors on pace to double their production. In addition, as coaches, top financial advisors have incentive to grow their team’s production because it can create a new meaningful stream of revenue for the coach. Through this coaching model, we have created a path for a top advisor to double their net income.

Hortz: Are there any other advisor services you built into your platform we have not discussed yet?

Kelly: Our end-to-end technology platform makes it much easier to run your financial practice, and that lift trickles down to the client because advisors are more prepared. One of the best examples of this is our in-force policy management. Today insurance producers are expected to provide annual reviews, but they do not have the tools to follow through on that expectation. As a result, advisors typically spend a huge amount of time prepping for client meetings.

We have taken the prep time from 50 minutes per client to 5 minutes. We send alerts when a client is 30 days from an anniversary date and provide the one-click annual review before the client meeting. This first-of-its-kind feature automatically provides the carrier statement and allocation change form, as well as key policy information such as average annual return, cumulative withdrawals and potential/actual income rider income values.

Hortz: Any other comments or advice you can share with financial professionals about the changing nature of the insurance business and how InsurTech can impact their firms?

Kelly: We believe the future for financial services is in holistic financial planning. This includes tax advice, understanding the role of insurance in a financial plan, estate planning, accountability, clear communication and trustworthiness. The future of financial advice is more comprehensive than it has been in the past. Insurance is going to play a major role in that transition and InsurTech will make that transition fully integrated and seamless into your business model and processes.

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics


Bill Hortz

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

Read Bill's Bio