Abacus Life, a publicly traded alternative asset originator and manager that specializes in life insurance products, recently launched a wealth management division, ABL Wealth, with the support of Dynasty Financial Partners. Now, the firm plans to seed that offering by acquiring and rolling up registered investment advisors under the ABL Wealth brand, and provide those advisors with leads from both the inquiries the company receives and cash payouts from its life settlements business.
ABL Wealth currently has no advisors or assets, but Abacus Life President and CEO Jay Jackson said he expects to make an acquisition in the first half of 2024. The firm is utilizing Dynasty’s investment bank, not for financing, but rather its expertise and knowledge around the acquisition process.
The firm is also currently building out in-house support and operations for those RIAs, and has several job postings surrounding that, including for a business development officer, operations associate and client service associate.
The new unit will target clients who have accessed liquidity from their life insurance policies with financial planning and investment management services. The division will be based in Orlando, Fla., and it will help clients invest policy proceeds or other assets into custom portfolios. It will also provide retirement planning and risk management.
“We'll pay out to individual policyholders hundreds of millions of dollars per year out of this office,” Jackson said. “We create a significant amount of wealth. And many times, those individuals don't have a financial advisor, and they're asking us, ‘Hey, do you have any ideas or recommendations on what to do with this quarter of a million or $1 million that you just paid us in liquidity for our policy?’ And having those financial solutions is really a very natural transition for us.”
Nine out of 10 policies never pay a claim, Jackson said, not because the insurance company challenges the policy, but because people stop paying on it. Rather than letting it lapse, or having to continue to pay premiums on those, clients can sell to Abacus, who will pay out 22% to 24% of a life insurance policy’s face value, on average.
In addition, Jackson said his firm is getting 10,000 inquiries a month from individuals who may not qualify to sell their policy but have other financial services needs. These leads are, on average, over age 55 and have $1 million of net worth.
Jackson believes his firm is sitting on a big differentiator from other wealth management practices, and that is using lifespan and longevity data of individuals to help determine the valuation of their life insurance policies.
“For the last 20 years, we've been aggregating lifespan data by re-underwriting seniors and getting a much clearer understanding of the impact of their lifestyle, but also their current impairments, their family history, their genetics, to give a more accurate lifespan,” he said.
Abacus wants to take that lifespan data and apply it to financial planning.
“We can actually give you a better idea of how you should be planning for retirement based upon understanding what your actual time in retirement's going to be,” he added.
That could be through an ETF or target-date fund that is more appropriate for that client, or it could be through Abacus’s own longevity-based investment products.
For instance, Abacus recently filed with the Securities and Exchange Commission to launch its own fund, the ABL Longevity Growth and Income Fund, a publicly traded, 40 Act interval fund, which it expects to have approved in the first quarter of 2024. The fund will invest in these life insurance policies, and it will have a minimum investment of $10,000. It will have an income target of 6% and a targeted growth strategy of more than 8%.
The advisors that Abacus acquires will become W-2 employees of the firm, and their company would operate as a subsidiary of ABL Wealth. Their earnouts would be related to the stock performance of the public company.
“I think that is such a key separator versus some of the aggregators that are out there,” Jackson said. “We view this as a partnership that we're going to grow the business together, and I'm actually providing you resources to grow your business, with both the inquiries and the cash payouts that we do. And in addition to that, you're totally aligned with the company because we're public day one.”
