From the June 2007 issue of Wealth Manager Web • Subscribe!

The Electronic Annuity

Technology has long been the driving force in getting rid of the middleman: Remove the salesperson and buy clothes from an online store. Remove the music store and listen to downloaded music. Remove the stockbroker and buy securities online. But one financial company has moved in the opposite direction, taking a bet that everyone is better off if technology is used to put the middleman back into the picture.

Finetre (, in Herndon, Va., started its life as back in 1997, and according to the company Web site, its "original goal was to bring annuity sales directly to consumers by way of the Internet." But that changed. Just as various discount brokerages realized over time that skittish individuals provided a far less reliable income stream than professional planners, Finetre found its future in making its platform available to firms rather than individuals by 2001.

"It's fair to say we have shut down the consumer business," says Steve Dunlap, Finetre's president and CEO. "We found consumers weren't interested. They were interested in advisors. So we pointed ourselves at the financial services industry. Our first client was Merrill Lynch. Today we are doing about $1.5 billion a month in annuity premiums, with some 15,000 transactions." Finetre claims to process $12 billion of the $200 billion invested in annuities each year.

The company continues to work with big firms like UBS, Wachovia and Merrill Lynch, and clearing firms like National Financial, Fidelity and ADP, as well as some broker/dealers. It still brands its annuity platform AnnuityNet, and has designed it so insurance carriers, broker/dealers, banks and individual sales reps can easily find the right products for their clients.

"It's not about just filling out forms online," says Dunlap. "We lead you through an online Q&A and integrate all the products and rules from the insurance carriers on the platform." Dunlap compared Finetre's system to the popular Turbo Tax program in terms of its easy-to-use format. And in fact, the company notes it has hired the same team that previously worked on Turbo Tax product to develop its next generation interface.

Finetre currently has about 1,000 products from nearly 40 providers. "We manage order entry and virtually eliminate errors this way. It becomes nearly impossible to make an error. For example, if a client is not allowed to purchase a rider in a certain situation, our system catches that immediately," and not three weeks later, when the paperwork may have been processed in a traditional system.

Indeed, good compliance is even more important than generating sales in today's regulation-heavy environment. Finetre doesn't mince words, actually calling compliance "sacred" on its Web site. Its annuity program comes with a suitability questionnaire and compliance reports. Additionally, it offers an "Integrated Suitability Program" which it describes as a "comprehensive review of your entire compliance environment."

The company has also realized that annuities do not exist in a vacuum for consumers, so it places annuities in the context of other investments, with additional details. "Once annuities are issued, the advisors have access to current positions. They can see the subaccounts and holdings. In fact, some of the firms that we partner with will display it in their own aggregation platform. This makes it easy to see: Here are all the assets, even though the funds naturally remain at the insurance carrier."

And specifically to help reps who are on the road selling annuities and other insurance products, Finetre has created a "Pre-Sales Kit," an offline solution that reps can synchronize with AnnuityNet when they're back in the office.

Finetre also offers the AnnuityGateway Solution, which operates with AnnuityNet. The company says this system "gives carriers the opportunity to extend easy, online annuity order-entry processes directly to any representative, anywhere--right on the carrier's own Web site."

And in 2006, the company announced an "integrated fax-signature capability" called Virtual eSignature Solution. As explained in a press release, this particular solution involves using a scanned image of a customer's signature on the various forms needed for annuity transactions. These signature images are then transmitted to a fax server to be delivered electronically with the original transaction. (NAVA subsequently issued straight-through processing standards, including those for managing e-signatures. These are available at

However, Finetre does not see e-signatures as the only, or even the best system for customer authentication. Also under development are voice print and public key infrastructure.

Concludes Dunlap: "You know the old saying that annuities are sold, not bought? We proved that."

Richard J. Koreto ( is editor in chief of Wealth Manager.

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