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.