Wealth2k Announces Solution for Broker-Dealers to Capture 100% of Registered Representatives' Fixed Annuity and Life Insurance Business.
HINGHAM, Mass.--(BUSINESS WIRE)--Nov. 21, 2005-- David A. Macchia, Sr., President and CEO of Wealth2k, Inc., a strategic marketing consulting firm that specializes in the financial services industry, believes that the time has come for Broker-Dealers to supervise sales of all fixed products by Registered Representatives.
"Although Broker/Dealers are beginning to establish policies for sales of equity-indexed annuities due to increased compliance and supervision liabilities, many do not understand either the scope of what they are taking on or the risks they face in potentially alienating large numbers of Registered Representatives," he explains.
Macchia points out that some firms lack an understanding of important structural issues in terms of the contracts in place between their Registered Representatives and insurance carriers. "Instituting a policy which states that EIA sales must be placed through the firm carries with it the implication of all fixed annuity sales coming to the BD. This is because in their contracts with agents, insurance carriers do not typically differentiate between EIAs and other fixed annuity products. The result is that immediate annuities and traditional fixed annuities will also be pulled into the B-D which had better be ready to properly handle that business or risk alienating its reps."
Broker-Dealers must also consider what programs and services their Registered Representatives will lose once their present fixed product provider relationships are terminated. Says Macchia, "Advisors always migrate to value, especially marketing-oriented value. Therefore, B-Ds may see potentially large segments of their Registered Representatives move to other firms unless the marketing, prospecting and seminar systems these reps presently rely upon are replaced with programs of even higher value."
Scrutiny of equity-indexed annuity sales practices at the state level also poses a threat to the traditional way in which Registered Representatives have conducted EIA business as an Outside Business Activity. "The recent complaint against one member firm brought by the Massachusetts Secretary of State should send an alarming signal to any B-D that knows its reps are selling EIAs away from the firm. The hub-and-spoke independent model has been attacked in a way that has never before happened."
Macchia predicts that independent marketing organizations (IMO), which have handled the fixed product sales of Registered Representatives for years, will aggressively attempt to recruit producers away from their B-Ds in order to preserve the IMO's economic interest. "And they will be successful unless producers see equal or greater value by staying with their present B-D. The only antidote to this recruiting threat is the delivery of overwhelming value," says Macchia.
There are a number of factors which are driving Broker- Dealers in the direction of taking all fixed annuity and even life insurance sales in-house. "The August Notice to Members 05-50 has effectively transferred regulation of EIA sales to the NASD. As a result, Broker/Dealers are now starting to realize that they will have to expand their supervisory responsibilities. The great and even unprecedented opportunity for the B-Ds is to go further to include all fixed products. This is the path to both an enormous increase in GDC and a solution for better compliance," he comments.
Growing top line revenue is increasingly important to Broker-Dealers. Compressed margins, increasing fixed costs, product commoditization and Registered Representative retention are among the priority issues affecting the profitability, growth and competitiveness of member firms. "I firmly believe that even in the most convulsive business atmosphere, where a dramatic change could cause commotion and disruption, there exists a huge opportunity for robust growth," Macchia contends.
In recognition of this growth opportunity, Wealth2k has introduced BD2K™, a solution which enables Broker- Dealers to both reposition 100% of their Registered Representatives' fixed annuity and life insurance business to the firm while meeting key business challenges. Among the business challenges BD2K™ is designed to address are:
- Providing sustainable competitive advantage to the firm and its Registered Representatives.
- Improving compliance and sales practices.
- Combining the availability of quality fixed annuity and life insurance products with the proper due diligence.
- Growing Gross Dealer Concessions (GDC) by as much as 50%.
- Improving net margins.
- Boosting up-selling and cross-selling.
- Improving Registered Representative recruiting, retention and loyalty.
When developing BD2KTM, Macchia asked these key questions:
- Will a directive to place all fixed business through the Broker-Dealer be successfully positioned as one that will help the advisor grow his or her business?
- Will such a directive be seen by Registered Representatives as opening up exciting new markets and sales opportunities?
- Will the image the advisor presents to clients be enhanced?
- Will the directive bring with it capabilities through technology that will help the advisor successfully up-sell and cross-sell?
"My conviction is that finding 'yes' answers to these questions is actually easy assuming that an innovative ixed products ecosystem is installed. This ecosystem is comprised of meaningful training, compliance-sensitive marketing strategies and sales tools which allow the Broker/Dealer and the advisor to transcend commoditization and transform into a marketing-driven business personality. BD2K™ is that ecosystem", explains Macchia. BD2K™ brings together all the components of compliance, marketing and sales that will achieve these results. Through creative, compelling and complianceapproved multi-media presentations to advisor-centric websites that positively impact the sales process to proprietary concept sales programs such as the popular Income for Life Model™, BD2K™ marries the art and science of marketing and creates a sustainable competitive advantage.
Based in Hingham, Massachusetts, Wealth2k, Inc. specializes in partnering with financial services companies and advisors to provide effective, client-focused presentations and internet technologies to increase sales, productivity and profitability.
