David Lau, founder and CEO of DPL Financial Partners, has turned the insurance industry upside down with a platform of commission-free annuities and other insurance products for registered investment advisors (RIAs).
Lau is being honored as part of ThinkAdvisor’s new recognition program, the LUMINARIES, for his executive leadership. He recently discussed his career and the development of DPL’s platform with ThinkAdvisor.
THINKADVISOR: What was the vision you had when you created DPL Financial Partners, and how has the firm evolved?
DAVID LAU: Looking at the financial services industry, I could see that the insurance industry was decades behind the rest of the industry in terms of driving out costs and commissions. While the vast majority of the rest of the financial services industry had long ago moved to low-cost, no-load (or commission-free) products, annuities and life insurance were still commission-driven products.
Not only does this no longer match the business models of financial advisors who primarily bill on fees, but drives product costs up significantly for the end customer.
As someone who has spent my 27-year career delivering better consumer value through my roles as chief marketing officer of the first internet bank and as chief operating officer at a no- load insurance carrier, this was a problem I wanted to tackle and was uniquely qualified to do.
The vision I have for the firm has remained true to its origins, but has not yet been fully rolled out. We continue to look to expand product offerings to include more life insurance, long- term care and disability products as well as expand the access to our products to additional audiences.
How did your positions at the first Internet bank and at a no-load insurance carrier lead eventually to starting your own firm?
The strategy at E-Trade Bank and its predecessor, TeleBank, was to lower overhead and distribution costs by eliminating bank branches. Our lower costs enabled us to offer better products and services to consumers through technology.
I took the same approach at Jefferson National, but instead of eliminating branches, the cost reduction was in the form of eliminating commissions and wholesaling costs. My success at Jefferson National was what enabled me to start DPL Financial Partners.
While the insurance industry had the desire to deliver commission-free products, carriers really didn’t know how — from the product creation to the technological and operational support required. Having proven myself in these areas at Jefferson National, carriers across the industry have been reaching out to work with DPL since our launch.
Additionally, my experience and success in raising capital and building startups was extremely helpful in getting funding from our capital partners.
How large is DPL now, and how much has it grown?
We launched DPL in 2018 and since that time we have grown to over 60 employees. We serve RIA firms through our direct membership model as well as through strategic partnerships with other RIA platforms.
Our direct membership represents over 1,300 firms with about $300 billion in combined AUM. Through our strategic partners, we support another 2,000-plus firms representing about $2 trillion in AUM. We are approaching $1 billion in annuities sold and about 500 life insurance policies since our launch.
What is the business model for the firm, and how is it different from other firms working in the annuity business?
Our business model is multifaceted: We work with carriers to bring new commission-free products to market and ensure they can support commission-free product offerings; we build technology designed around product discovery (helping to find the products that best fit client needs); and we support the growth of our RIA firms by serving in a consultative role to expand their offerings to include insurance.
While others build technology, the new ground we are breaking is in the development and delivery of low-cost, commission-free products — DPL is the driver of the commission-free annuity and life insurance space.
How does DPL Partners fill the needs of RIA firms and get insurance companies to participate on the platform?
We fill two primary needs for RIA firms; the first is from a business perspective. Without the ability to provide insurance solutions to their clients, RIAs have fallen behind the rest of the advisory industry, most of whom now bill on fees as RIAs do, but can also deliver more holistic planning and investing solutions by incorporating insurance.
By bringing commission-free insurance to market, RIAs can now better serve their clients, capture greater share of wallet, and deliver better retirement planning outcomes while keeping clients away from competitors.