Why Signal Advisors Is Not Your Typical IMO

Benzinga will be holding its annual Benzinga Global Fintech Awards, a day of dealmaking, networking, and recognition in the financial technology space, on Nov. 10, 2020.

In recognition of those disruptive innovators creating positive and diverse change within the financial services space, Benzinga chatted with Signal Advisors co-founder and CEO Patrick Kelly.

Founding Story

The advisory business is outdated and due for an overhaul. That’s according to Kelly, who co-founded Signal Advisors to streamline the wealth management and insurance business.

Kelly comes from a background deeply rooted in financial services. From his experience working as an advisor at Northwestern Mutual and Kelly Capital Partners, to founding RepPro, an annuities software acquired by RetireUp in 2008, Kelly saw the need for a tech-enabled Independent Marketing Organization, or IMO.

Traditional IMOs sell relationships; they distribute annuities and insurance policies through networks of independent financial advisors. With the rise of technology, however, many IMOs have failed to innovate with the times, leaving advisors exposed to commission delays and non-essential marketing costs.

The industry's problems became most apparent during the coronavirus pandemic, where some advisors saw themselves waiting 50% longer to get paid due to outdated processing techniques.

“IMOs are basically insurance distributors selling relationships,” Kelly said in a discussion regarding the industry’s commoditization. “In an IMO structure today, everyone else, aside from the single advisors, have this role called a marketer, which is essentially an inside sales person that tries to coach advisors on how to build better businesses. They also get paid a lot of money to recruit new advisors. About 25 to 50% of the IMO’s revenue.”

Benzinga was told traditional IMO costs were simply too high. Something needed to change.

“We actually replaced the marketer with a top financial advisor, someone who’s doing about $40 million in total new production a year,” he said. “They’re in the trenches building financial plans and scaling financial advisory practices, coming across all the same problems that financial advisors usually face. Now they’re able to share their experiences and how they would solve those issues.”

Signal Advisors allows users access to a peer-to-peer coaching network of advisors with practical experience. Those advisors are paid to provide guidance on how to build profitable financial advisory practices.

“The other pieces we’ve invested in are technology and product,” the CEO added. “We built out the first end-to-end technology platform for insurance producers.”

In the simplest way, Signal Advisors defragments the advisory space by providing users access to know-how, capital, and processing efficiency.

“The application gets checked by the IMO, the insurance company, and then you start the money movement process,” Kelly explained. “As long as the application is in good order, meaning you have all the right boxes checked and information filled -- but you also have the money movement paperwork -- we’ll pay you in 24 hours.”

The Path Upwards

At Signal Advisors, growth is paramount.

“If we have a really big producer doing $20 million in annuity production, we [provide] them a path to doubling their production by becoming a coach,” Kelly said in a discussion regarding differentiation.

“We’re talking about doubling your production overnight.”

Signal, through its tech-centric approach, enables smaller, constrained producers better access to advisory tools. This addresses growth concerns in a highly saturated industry where margins are relatively tight.

“Insurance companies are too big, and there’s too many financial advisors out there for it to be reasonable for them to interface with you. Through an IMO -- a middleman or distributor -- it’s more effective to set up distribution. The core service we provide is distribution and access to product,” Kelly discussed. “The way we win, though, is through everything else we do.”

Photo from the Signal Advisors website.

The company’s core product consists of the following features:

• TruePay: Payment within 24 hours of electronic submission.
• Marketing: Comprehensive lead and data management system.
• 1-Click Reviews: Create client-facing review packets in seconds.
• Tracking: Check statuses, requirements, and communicate online.

"Signal Advisors has changed the way we run our business," said Dave Boike, Founder of Retirement Resources, a Michigan-based financial planning firm, in a testimony.

"For example, I was always moving from carrier website to carrier website to get updated inforce annuity information. The 1-click annual review saves our firm about 20 hours per week. I have been in the industry for 30 years, and not seen anything like it."

Recent Developments, Innovation Outlook

Signal Advisors upends the traditional IMO business by eliminating marketers, adding advisor-to-advisor referrals, and investing directly into advisor coaching initiatives.

Going forward, Signal aims to grow its team and double over the next six months, expanding into other markets. Additionally, Kelly discussed on-going efforts to aid user marketing efforts.

“People are trying to find the right marketing strategy in this new era. A lot of financial advisors are saying maybe it's time to start webinars or do Facebook advertising,” Kelly said. “We’re going to give you the tools and train you.”

To learn more about advising with Signal Advisors, click here.