From the March 2010 issue of Research Magazine • Subscribe!

Pro-Consumer

Jefferson National's Laurence Greenberg has a history of designing low-cost products that add value

Laurence P. Greenberg
President, Jefferson National Life Insurance Co., New York City
What Drives Him: "One: To do something that no one has done before. Two: To see the team that I've built do things they never thought they'd have the capacity to do."

Jefferson National Life Insurance Company has given the controversial variable annuity an extreme product make-over. It was the sort of major challenge the firm's innovative president, Laurence P. Greenberg, who led the launch, seeks out and relishes.

Designed to fit the fee-based model, Monument Advisor is the industry's first VA with a flat insurance fee: $20 a month for the life of the contract -- no matter how much the account grows in value. Further, Monument comes with a generous selection of more than 200 tax-deferred funds in which to invest.

"Typically, fee-based advisors, especially RIAs, said they hate annuities and would never sell them. Our challenge was to show them this is not what you normally think of as an annuity. It's a different way to approach it. We're trying to give variable annuities a good name because we believe the right annuity makes sense in portfolios," says Greenberg, 47, based in New York City.

For separate accounts, the no-commission, no-rider Monument, which has neither M&E fees nor surrender charges, was developed to help fee-based and fee-and-commission-based advisors better serve clients. Jefferson launched it in 2006.

Setting new paths is what the Philadelphia-born Greenberg is all about. Previously, he was a key player in bringing to market the first nationwide online bank, TeleBank -- now E*Trade Bank -- driving deposits from $220 million in 1994 to more than $8 billion six years later.

"Larry has the ability to see what's missing from the marketplace and to take a unique approach to solving issues people didn't even know they had," says Jack Sharry, executive vice president-strategic development of LifeYield, a provider of financial services technology.

In developing Monument, Greenberg's main aim was to reduce costs and boost value.

"Annuities get a [bad] rap for being expensive products. [Indeed] why should someone with $25,000 or $1 million in an annuity pay more the more they save? That's what happens with an assets-based fee," he says.

Monument focuses on helping investors build savings tax-deferred. "Baby boomers are still accumulating retirement funds. Any benefit for tax deferral will help them -- especially after what happened at the end of 2008," says Greenberg, alluding to the global financial meltdown.

Low costs and consumer value also imbued the mindset at TeleBank, whose top management is now at Jefferson National. Chair David Smilow was TeleBank's founder; Greenberg held the COO post. Also at TeleBank were David Lau and Michael T. Girouard, Jefferson's COO and CIO, respectively.

When Greenberg joined as president in 2004, the life insurance carrier had just acquired Conseco's variable annuity business. He and Smilow realized, however, that Conseco's traditional commission-based VA was far from the best approach.

"Over the last 30 years, variable annuities switched from focusing on helping people save tax-deferred, and then annuitize an income stream, to a vehicle that lost sight of the tax-deferral component and was all about the rider," Greenberg says. "We believe that if you can provide tax deferral, you're providing a super-charged way of saving for retirement."

And the way to make that possible was to create a low-cost, value-added VA. Largely responsible are the firm's efficient, large-scale technology platform and fully automated processing system.
"People were trying to crack the fee-based advisor market for a long time, but with limited success," Greenberg says. "We felt we had a product that really made sense and would be able to reach them and grow. We look at fee-based advisors as super-consumers, trying to realize the best value and grow their clients' assets."

Greenberg would never have made his career building businesses had he continued to let his natural academic bent dominate.

After earning a BA in economics from The Johns Hopkins University in 1984, he worked as a research analyst at the Federal Reserve. Then he moved to The Restaurant Association, also in Washington, D.C., where he was a food-industry analyst.

It was his next job, building publications -- on the operations and marketing side -- at CapitalCities/ABC, in New York, where this journalist's son got a taste for doing business.

And would, accordingly, change the way he presented himself. "I was more of an introverted, analytic person. But to have a broader business career, I became more extroverted. You have to know your limitations and work on them," he says.

In 1993, he joined Smilow to oversee marketing and operations at the fledgling Virginia-based TeleBank. There, Greenberg took the biggest risk of his career: to bring a relatively small bank onto the national stage -- with no brick-and-mortar branches but serving clients instead via telephone and, later, the Internet. The move required a huge ramp-up of marketing and advertising dollars.

To be sure, it was a leap of faith. "People would say, 'That's crazy. Nobody is going to conduct business with a financial company when it's not face to face," he recalls.

But TeleBank's reduced operating costs were passed on to consumers in lower fees and higher account rates. By 1998, it had more than 50,000 accounts. Two years later E*Trade Financial bought it.

Greenberg stayed for a bit, then, with Lau, opened a management consulting firm to help develop banks. In 2002, he joined Merrill Lynch as a marketing vice president, soon introducing the firm's Beyond Banking service.

But at the big wirehouse, Greenberg confirmed to himself that, at heart, he was an entrepreneur. And when Smilow, who had gone to Jefferson, asked him to help take the carrier to the next level, it was an offer he could hardly refuse.

"I went back to a small company to try to create a new path in the industry. That's the most enjoyable for me," Greenberg says. "Having so much control over your destiny is such a rich experience. There's nothing that equals it."

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