The US multi-dealer platform has announced record increases in its structured investment broker-dealer volumes.
Simon Markets has expanded its digital presence over the past year by entering the annuities, defined outcome and cryptocurrency industries and onboarding several partners that include Fidelity Investments, AIG Life & Retirement and NYDIG.
The platform has reported a 130% year-over-year in broker dealer volumes and a 400% increase in annuities volumes in its third quarter earnings of 2021.
According to Joseph Giordano (pictured), chief business development officer at Simon, the overall market for structured products is up considerably year-over-year fuelled by the general market sentiment.
“I think our clients have performed incredibly well and all the tools that we bring to our broker-dealer clients is one of the reasons why we have seen a year-over-year increase in broker-dealer volume. We attribute this to our existing client set and our ability to bring on new distributors has also helped that,” he said.
“If we’re looking at the overall structured products market in the US, volume has increased approximately 30% over the last year,” said Giordano, adding that this is an indication of how these investments are being perceived as they become more understood and accessible.
Since widening its offering into annuities in 2020, the platform has tapped into a market which would go on to dominate the spotlight as an attractive option for clients nearing retirement.
“An indexed annuity is an index wrapper that has about 15 to 20 different index options and strategies within it. So, the advisors’ challenge is to try and determine how to best efficiently and effectively figure out how allocate for each client,” said Stolz.
The platform is supporting advisors by providing the data to explore other options that may be better and for each individual client depending on each client's risk profile.
“Anytime a company is looking to enter the annuity space for the first time or trying to enhance their product and differentiate themselves, they must bring out something that no one else has,” said Stolz. “Therefore, we will continue to see more indices, more options. At some point, when companies feel as though they can get it approved, we're probably going to see cryptocurrency options within annuities as well.”
The firm recently introduced the lifecycle portion of annuities, which allows advisers to look at their entire annuity book and anticipate various events. This is also helping advisers to make the process more efficient as the amount of work that is required by an adviser to support an existing annuity policy is extraordinary, particularly if it is one that has a lot of benefits and riders on it.
“It's one of the things that causes advisors to shy away from annuities because they know how much work it is, so the next step for the lifecycle is to begin to integrate with the carriers so that you can do transactions on a policy within Simon,” said Stolz. “The goal ultimately is to ensure that advisors almost never have to contact an insurance company, which is a task they do not enjoy.”
One of the newest additions to the Simon platform comes in the form of digital assets like Bitcoin, which is one investment that fits the firm’s playbook.
“We’re starting with educational training to make sure that home offices and advisors feel comfortable with the investment that is available on a platform. It's nearly a brand-new asset class. Even though it has been around since probably the last 10 to 12 years, it has become mainstream in the last two or three years,” he said.
As wealth management firms start offering these products, the importance of education will become critical to supplement marketing activities.
“We are aiming to launch new educational materials around digital assets by the end of this year,” said Giordano. “In doing so, Simon will have a full suite of educational materials available for digital assets. After that, we will do the same with traditional alts.”