Over my many years as a technology columnist, there’s one area of financial services I’ve shied away from: the insurance side of the business. There’s good reason for that. I prefer to write stories about new, innovative firms, or established firms making significant upgrades to their existing technology. I don’t often come across a lot of true innovation in the insurance world.
On top of complaining about the technology in general in the insurance sector, independent RIAs complain particularly about the difficulty of getting electronic feeds from some firms. These RIAs want the ability to manage funds in deferred annuity subaccounts with the same ease they can manage their assets held with major custodians. But that level of flexibility is the exception, not the rule.
I am rarely approached by insurance firms about their technology, which tends to reinforce my opinion about their offerings, so I was rather surprised when I was recently asked by Jefferson National Life Insurance to take at a look at its annuity Web site.
Perhaps it should not have come as a complete surprise. After all, Jefferson National is not your average annuity provider. The firm views itself as an innovator, and on the product side certainly appears to be one. Most of the executive team was formerly involved with creating the nation’s first pure-play Internet bank, Telebank, which subsequently became E*TRADE Bank. The philosophy at Telebank was to lower overhead and pass the savings on to consumers through higher returns and lower fees.
The team eventually decided to try a similar approach to annuities at Jefferson National. The result of this effort was “Monument Advisor,” the industry’s first variable annuity with a flat $20 per month insurance fee. The average policy size is $200,000; this means the average policyholder pays just 12 basis points per year while many competitors charge 130 basis points for similar products.
How can Jefferson National keep fees so low? By following the same formula it did for Internet banking—leveraging technology and lowering expenses by eliminating wholesalers and commissions (the advisors who use the annuities earn a fee for managing the assets). Rather than rely on the traditional sales model, Jefferson National relies on a centralized sales/operations center and technology to keep distribution costs low. The company direct-markets to advisors through its Web site, webinars and industry conferences.
While the Monument Annuity, with its extensive selection of investment options, tactically managed models and low fees, is Jefferson National’s primary allure, the firm also promotes a suite of online tools for advisors as part of its overall value proposition. For example, I was told the company offers an “advisor-friendly” technology platform incorporating features such as simplified fee management, agile Web-based trading, an easy-to-use dashboard and seamless integration with custodian platforms. The promise of all this great technology piqued my interest, so I decided to take a closer look.
The Jefferson National Web Site
My introduction to Jefferson National’s advisor tools was delivered courtesy of company president Larry Greenberg. He said his firm did not set out to have the most cutting-edge platform, but simply wanted one that was reliable and easy to use. As we shall see, it is not cutting edge and it is reliable; whether it is easy to use is somewhat more questionable.
Before we get into the details, let’s start with some basics. The platform is Internet-based. That means it is less expensive for the company to maintain than other systems would be. It is also an Oracle-based system, which means it is reliable and highly scalable. Although I did not test compatibility in-depth, I did try and log on to the platform with a variety of devices, including a Windows 7 PC, a Windows 8 PC, a Windows 8 phone, a Mac (with the Safari browser) and an iPad. In all cases, I was able to log on and access information.
The Jefferson National Web site offers a number of tools for advisors. Some tools help with the proposal and sales process. Others help with the management of the investments within the deferred annuity. In addition, there is a library of digital forms in PDF format, as well as an online annuity application assistant.