An Interview with Michael Freeman, President Of Due Diligence Works

Q: What is the new Carrier and Product Score?

MF: The DDW Score provides a view into products and carriers that has not been seen before but is sorely needed in the industry. We provide an independent view by scoring the product and the carrier. For products, we look at all aspects of the product, such as risk, expense, income and accumulation benefits, and sales trends to name a few. For the carrier, we review the financials ratings, of course, but also look at their Service Score and how we think the carrier is trending.

Q: You mentioned a Service Score. What is that?

MF: Well, we are actually introducing two new services here. The Service Score is part of the DDW Score. The Service Score is a number determined by surveying Broker-Dealers and asking them how they feel about carriers they work with across five dimensions: Responsiveness, Technology, Product, Partnership, and In-Force Client Servicing.

We find that just looking at the financials of the firm can severely lag the risk to the Broker-Dealer. By including more leading indicators across the Carrier and Product, we can help Broker-Dealers manage the risk better and position their product platform to be a growth engine for the business.

Q: What prompted you to start these new services?

MF: Like most things we do, our clients guide us. Clients were asking for a simpler way to look at due diligence. This does not mean that you can bypass the heavy lifting we do, but it does mean we can explain things easier to someone who does not live inside “products” all day long. If you take a typical product committee, members are entrusted to manage product risk and bring their own perspective and expertise. By creating a nomenclature that everyone can understand that can be tailored to each organization, it allows the committee to have a robust discussion at a different level vs. getting caught up in hundreds of pages that most people have barely read or understand. This helps the committee get to the right answer for their firm much quicker.

Q: How does the DDW Score help with new regulations like Regulation Best Interest?

MF: We started creating the DDW Score before Reg BI gained momentum because it just made sense for the industry and our clients. But when Reg BI came out, the focus on Neutral Factors Analysis and providing impartial advice made our DDW Score perfect for supporting these criteria. I would say our work on DOL and working with almost 40 firms in the US and Canada has helped influence our direction, so supporting Reg BI before it was published was no accident.

Q: Final thoughts on the DDW Score?

MF: What we have created finally brings together a product view and a carrier view and, more importantly, brings in leading indicators. This new service will be good for both broker-dealers and carriers alike. Broker-dealers are bringing this service into their governance and approval process but also working with Sales to create the best platform for their strategy. Carriers can use the service to think through their product and distribution strategy and also see where they fit in the competitive landscape. With these two groups in mind, we believe we can help all boats rise and help the industry advance.