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DPL Acquires AnnuityFix to Boost Breakaway Advisor Program

By John Manganaro

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What You Need to Know

  • DPL gains a broker-dealer platform through the transaction.
  • The firm also gains expertise in harder-to-transfer annuities and a methodology for fiduciary advisors to consolidate client assets.
  • Because annuities are often the last asset class tethering advisors to their BD, the deal should boost the independence movement, Lau says.

DPL Financial Partners, a commission-free insurance platform for registered investment advisors, announced Wednesday that it is acquiring AnnuityFix and its affiliated broker-dealer, Johnstone Brokerage Services.

David Lau, DPL’s founder and CEO, tells ThinkAdvisor the acquisition is designed to enhance the DPL breakaway accelerator program, which allows financial advisors to transition their legacy annuity business to a fee-based business model, enabling many to go independent.

As part of the acquisition, DPL has appointed AnnuityFix founder Grant Johnstone as chief compliance officer and chief legal officer. The firm’s employees will join DPL, according to a statement detailing the acquisition.

“Annuities are often the last asset class tethering advisors to their broker-dealer,” Lau explains. “Since launching our breakaway accelerator program late last year, we’ve begun working with scores of breakaway teams and rollups to transition annuity books.”

This experience, Lau says, has demonstrated the power of DPL’s technology and platform, but it also help the firm to identify areas where its services could be expanded.

“With the accelerator program, we found we could reliably support and transition about 70% of the breakaway advisors’ annuity holdings and get them into better, fee-based products that serve the clients’ needs,” Lau explains. “It was that last 30% that was more difficult to address, but this is exactly what we will be able to do with AnnuityFix’s solution.”

The key to the transaction, Lau says, is the fact that AnnuityFix has both sophisticated annuity transfer technology as well as its own broker-dealer, meaning those 30% of annuity products that aren’t fit for what is known as a 1035 exchange today can still be brought over by the advisor who is seeking independence.

As Lau explains, the breakaway accelerator provides advisors with transition support as they move to a fee-only model, utilizing technology to evaluate each client’s annuity holdings to determine whether it is beneficial for the client to exchange them for one of the dozens of commission-free products on the DPL platform.

In cases where favorable terms or features mean keeping an existing commissioned annuity is in the client’s best interest, DPL can now help transition those policies from the advisor’s existing broker-dealer.

Johnstone calls the move “a huge win for the advisor and client, both of whom will benefit from DPL’s commission-free product offerings and proprietary technology for evaluating, transitioning and managing large blocks of annuity assets.”

The acquisition will be finalized pending regulatory approval.

Pictured: David Lau 

John Manganaro

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