Websites like Orbitz, Priceline and Expedia helped do-it-yourself-minded travelers undercut travel agents, putting price and value comparison at the hands of the consumer right in their own home. Sign onto a computer or mobile device, fire up the Internet and poof! — instant travel quotes.
Now, Stan Haithcock, known widely as “Stan the Annuity Man,” is trying to undercut insurance agents and brokers with a new direct-to-consumer website, called annuities.direct, which provides free, real-time quotes for annuity products to the masses.
“We're providing live quotes with the best carriers and giving you enough information to buy it on your own,” according to Mr. Haithcock, an independent insurance agent and outspoken critic of the current annuity distribution system, which he says permits salespeople to peddle unsuitable products to investors and
incentivizes the sale of certain annuities over others.
Consumers can shop for four types of annuities — single premium immediate annuities (SPIAs), deferred income annuities (DIAs), qualified longevity annuity contracts (QLACs) and fixed annuities (or, multi-year guarantee annuities). Mr. Haithcock is also planning to offer quotes on variable and fixed-indexed annuities — among the
most complex annuity products — by the end of the year.
While Uber is an alternative to taxis and Airbnb is a hotel alternative, the new annuity portal, which launched in late March, is an alternative to agents, said Mr. Haithcock.
“This will be the robo version of annuities,” he said.
Mr. Haithcock's platform isn't the first of its kind. Hueler Investment Services, Inc. has offered a direct-to-consumer online portal, called Income Solutions, for about six years, according to chief executive Kelli Hueler. The portal generates real-time quote comparisons on income annuities.
“The important thing to take note of is there is increasing competition to deliver to the public, which I think is always helpful,” Ms. Hueler said. “I think the question will be: Will consumers really be well served? I think that's the challenge of the future of the delivery model.”
HOW IT WORKS
Through annuities.direct, consumers can get a live quote by entering information on state of residence, age, gender, money to be invested and whether the account will be qualified or non-qualified. The site provides a side-by-side comparison of the top five to 10 (based on user parameters) annuity quotes.
Quotes are filtered based on the highest contractual guaranteed amount (in monthly or annual income payments), and COMDEX ranking (which combine rankings from ratings agencies A.M. Best, Standard & Poor's, Moody's and Fitch). Products from lesser-credit-quality firms are filtered out, Mr. Haithcock said.
At the end of the process, a licensed administrative assistant at the chosen insurance company walks through the necessary paperwork with the consumer. (The only reason this happens is due to current law, according to Mr. Haithcock.)
MATURATION
Mr. Haithcock expects his platform to lead to a “maturation” of the insurance industry.
Automated investment management platforms — known broadly as “robo-advisers” — have taken the financial industry by storm and
challenged the traditional notion of sitting across the table from an adviser to receive investment advice.
Consumers have become acclimated to an increasingly digital environment and having more choice presented to them, according to Bill Poll, a partner at Information Asset Partners, which specializes in predictive analytics around financial products.
“They want a webpage, they expect to have a shopping site, they want multiple quotes and to control the process more,” Mr. Poll said.
Judson Forner, director of investment marketing at ValMark Securities Inc., an independent broker-dealer, acknowledges the annuity platform could appeal to certain “do-it-yourselfers.”
Advisers, though, are able to help consumers determine how annuities fit in their financial plan, and understand perhaps-overlooked factors such as death-benefit provisions, cost-of-living-adjustment (COLA) considerations and financial strength of the carrier, he said.
“In the case of annuities and especially with products like SPIAs, DIAs and QLACs, that are largely irrevocable purchases, we have seen the majority of people looking to talk to someone they trust face to face before making that kind of decision,” according to Mr. Forner. “There will always be a place for truly commoditized ways of business and there will be people who are drawn to that, but I hope they truly understand the potential consequences if they are unfamiliar with the annuity arena.”
Many robo-advisers still acknowledge the need for a human touch. Financial Engines, for example, recently purchased The Mutual Fund Store
to gain access to more human advisers, and other platforms such as Vanguard Group's Personal Advisor Services
combine technology with human advisers.
But SPIAs, DIAs, QLACs and fixed annuities are easy to understand, Mr. Haithcock said. The concept of some being used for income now and others for income later is a concept he believes a nine-year-old could grasp.
“If [consumers] want to talk to an adviser they certainly can,” he said. “But I think we'll provide enough information for them to make their own decision.”
