This month, our CEO, Jay Judas, talks to David Kleinhandler, Founder and CEO of Optifino. The pair chat about David's journey to founding a life insurance technology company, his childhood in the Bronx, the coming reckoning for life insurance producers, and where to eat in New York City. Read on to learn more!
JAY: David, I am so glad you could join me this month. We have known each other for a few years, and I have enjoyed watching you build Optifino. The more I learn about your company, the more I realize just how many life insurance industry challenges it addresses. Also, I might add, you are just getting started. Tell me about Optifino and your role there.
DAVID: I have been looking forward to this interview, Jay, and I want to reframe your question around the passion that drove me to start Optifino. After two friends encountered substantial troubles with their policies, I saw a glaring hole in the space. I spent three decades in life insurance and then became an angel investor and venture investor, so it irked me to no end that the industry had yet to address so many of the pervasive problems, and still lacked the end-to-end solution that handles policy design and aftercare.
One friend nearly lost his business due to the reliance on snail mail and antiquated systems used in policy aftercare. Had he not paid his premium on time, the policy would have lapsed, resulting in losing his business due to fact he was uninsurable and big loan from a bank was collateral assigned to them. The other was being pitched an accumulation product when he was interested in protection. Looking through this lens changed everything for me. I want on a search to find a solution after these issues happened; I couldn’t find a solution and it sparked me to start Optifino.
Helping these two friends reinvigorated me with the passion I have for this industry, where I can truly help people, and motivated me to build a solution.
I love to define my role as player-coach CEO because of the way I approach training and relationship-building, always donning multiple hats at once and never thinking I’m above any task. This begins with empathy and understanding of the producer’s role. This is paramount as Optifino hopes to help the producer with an end-to-end solution that empowers them to use data and information to grow their business and challenge the status quo.
Being a player-coach CEO who is an active listener means being on the field with the producers and other client advisors—not in the stands—taking the time to understand their pain points and complaints. It means sitting with them as they go about their usual activities, from doing cold calls to product demos and then having them sit with me as I worked on building Optifino.
Being a player-coach CEO means knowing they have as much to teach me as I have to teach them, because we need to be able to translate the benefits into a language everybody understands—not just expert jargon, tables and graphs. For too long, the life insurance industry has communicated in its own language and operated in a world disconnected from financial planning.
Our approach is about creating a platform that acts as a point of sale, built off a shared language, and that integrates life insurance into the holistic financial planning process based on client goals. Producers never had these tools before, making every sale an uphill battle so, by having this platform, we will make their lives easier and the ability for potential clients to understand the value in their life much more simple.
JAY: You grew up in the Bronx and look back at that time as idyllic. In some respects, it really wasn’t the easiest upbringing, but you did not really realize some of the hardships you faced. It is probably fair to say that your entrepreneurial spirit kicked into gear during this time, too. How would you describe your childhood and what path led you to the life insurance industry and to where you are today?
DAVID: I grew up as a poor kid in the Bronx, hungry and determined. As far back as I can remember I had a profound curiosity about how different businesses worked and why. I found personal inspiration from my best friend’s father, who was an agent at Prudential. I watched how he and his family were able to do things that mine could not afford, such as going on vacations with no concern over how it would impact his ability to take care of his family. After a while, I finally asked about the details of the business, seeing that it was a very meritocratic industry where your input led to real output. I witnessed that life insurance is an industry where you can build a real business if you’re good at it.
Most importantly, I knew that I had an edge from everything I learned navigating the trials and tribulations that come with being a poor kid in the Bronx. As I like to say, I earned a PhD - poor, hungry, and determined - from UCLA - the university corner of Lexington Avenue - which helped me build relationships easily and relate to just about anyone, no matter where they came from.
From the boardroom to the boardwalk, I honed my ability to become the life insurance expert I needed to be while also developing the empathy that allowed me to cater to their goals because I spent the time getting to know them.
JAY: Your early success working in life insurance allowed you to become an angel investor and to broaden your network of relationships which, I understand, have contributed to Optifino’s rapid growth. I know you were an early investor in FanDuel, Lemonade and even Juul. Though, with Juul, I want to point out that when you invested, their mission was to stop smoking and to not start a health pandemic. In addition, you are an owner in a few sports teams in the Midwest and Israel. What lessons have you taken from being involved in the success of so many companies and how have you applied them to Optifino?
DAVID: Success is a mindset, but like with any mindset, it’s a muscle that needs to be trained and sharpened. To do that meant approaching every business and category with curiosity and humility, a growth mentality in other words. It meant approaching every problem as an outsider while embedding myself into each business I invested in to understand the culture and intricacies. I grew into my role as an advisor with each company, taking small bites and growing from there as I learned more about the company and the business.
Understanding the perspective of the other person is crucial, whether for developing relationships in sales or whether you are investing in a company. Leaving room for the fact that you might be wrong, and believing that everybody has value to provide, helped me drive more impact with every investment. I now apply all these lessons to my model of being a player-coach CEO at Optifino.
JAY: I want to dig more deeply into Optifino and its place in the market. You previously mentioned to me that Optifino improves both the customer’s experience in purchasing life insurance as well as improving a producer’s experience in working with those customers. Explain what you mean by this.
DAVID: I spent nearly three decades as a producer, I know firsthand the pain points they face in life insurance, specifically the analog nature of the entire process. One of the biggest is the knowledge gap that exists between the producer and potential client, where producers often speak a different language than the client and overutilize life insurance jargon.
Our platform creates a shared language and experience that puts the producer and potential client on the same page, so the producer needs to provide less upfront education because the potential client can more easily visualize the potential outcomes of different policies. Because of this, we are addressing the pain points of producers first since they see firsthand the knowledge base and prejudices that clients bring to the table when exploring life insurance.
The other major challenge is addressing misconceptions around permanent life insurance that clients bring with them to the table. Many know they need to take action but become reluctant to do so when they see how overwhelming and lengthy the process becomes. Our platform is meant to set expectations along the way, both in terms of how life insurance can contribute to their goals and also in terms of the steps involved in the onboarding and underwriting process. In addition, the Optifino platform integrates interactive education and visualizations, so the clients feel confident that they are making the decision for themselves - not that they are pressured by an agent to buy a specific product.
We believe the more impactful conversations we can drive, the greater understanding we can drive around the tax-advantaged benefits of life insurance that are so frequently misunderstood, overlooked or not known.
JAY: I am certain that I am not the only one thinking, “Optifino sounds amazing but how does the company overcome working with insurance companies’ legacy systems?” If I were to use an analogy, you can control the quality and functionality of the plumbing in your house, but when you reach the public streets, you are left dealing with what is there. How do you integrate, or not, with the antiquated technology of most life insurance companies?
DAVID: One of our guiding quotes is “The magic you’re looking for is in the work you’re avoiding” because it summarizes the life insurance industry perfectly. So much of the antiquated technology that exists to this day can be explained by the fact that so many avoided doing the work, and we decided enough is enough. That is not to diminish the size of the hurdles we must overcome, but we attribute the size of those hurdles to how they grew overtime from going unaddressed.
The first hurdle we overcame was building the software to interact with the carrier’s illustration software, since there are no direct API integrations with carriers. At the moment, we can work with 20-plus carriers and we are adding more carriers and more products every week, to make sure we can truly do the whole market comparison for every client we are working with. However, there are still other hurdles to overcome if we want to be the central hub for this whole industry, the main one being instant communication with carrier systems.
How do you conquer an elephant? One bite at a time. We’re doing the work nobody else wants to do to separate ourselves from the competition. We are constantly improving that middleware we already built to work with all different types of illustration software. We want to have direct API integrations with carriers, and we will get the carriers to understand our value. The day that happens we will win the game.
We also understand that it’s inevitable that some carriers won’t give us direct API access, and we will continue to support the way we work with them at the moment in the future.
JAY: Selfishly, I want to bring up a topic we discussed and are in total agreement about. This is the subject of life insurance producers not having FINRA licenses and the ability to sell variable products. What is your view of this all-too-common occurrence in our industry?
DAVID: I am not sure most producers realize the reckoning that is coming to the life insurance industry when it comes to compliance and regulation. The consumer has been left out to dry for too long, being sold products that do not match their goals or holding onto old policies that are not optimized against their current goals because there is no aftercare in the industry.
Producers sell the product with the carrier they know best since, until now, there were no tools to compare policies across all top carriers against a client’s financial goals. Moreover, life insurance policies are not set-and-forget as many believe or behave as if they are, and should be annually reviewed, yet no producer is providing that service. In the long run, this lack of personalized policy alignment and goals optimization in aftercare leads to less policyholder satisfaction, which we see in policy satisfaction dropping after 10 and 20 years.
Increasing fiduciary and licensing standards means a lot of products are being sold without the proper licensing or training, meaning the client is not getting the whole story. This is why our mission is to help professionalize this industry by creating a standard against which products are sold and optimized against goals. The end user is the most important aspect to this model, and if they cannot clearly communicate how their policy is working for them, then it hurts our ability to help the next potential client. Our platform introduces objectivity and helps the agent and client to visualize their choices and that helps address all the new regs.
JAY: I agree. I am frequently reminding folks that IUL is not VUL! Let’s switch gears – I want to hear about how you spend your time outside of Optifino. You have three daughters, 25, 23 and 19, and it is not a secret that you are a close-knit family and enjoy doing lots of things together. You also keep up with your passion for sports and are heavily involved with several charities.
DAVID: You are exactly right. I spend a ton of time with my family because if we can’t do that then why do we work so hard? We prioritize family time, whether that’s regularly scheduled family dinners, traveling, going to sporting events, or even going to Broadway. The most important thing I try to impart is hard work and dedication, reminding them every Thanksgiving of where I came from by driving by where I grew up in the Bronx. They are blessed with comforts and opportunities I never had, and the important thing is that they make the most of them and do not take them for granted. I am proud of their integrity and work ethic, and they truly have taken the best qualities of my wife and me.
JAY: I cannot wait to see how Optifino evolves, David. Thank you for being a part of the Tier One Interview Series. We have arrived at our restaurant question and, as a native New Yorker with access to some of the best culinary experiences in the world, I know you will not disappoint our readers. Without naming a steakhouse or a steak dish, give me some recommendations on where I need to eat and what I should order.
DAVID: My top recommendations for places to eat and dishes to get would be: Frenchette in Tribeca makes the best chicken in the world, Katz’s Deli has an incredible pastrami sandwich and last, but certainly not least, Russ and Daughters Café bakes delicious bagels – do not miss out on these when visiting New York City.
Since its inception, Life Insurance Strategies Group has solely focused on the individual high net worth life insurance market. We do not sell products. This allows us to offer unbiased, pragmatic advice. Visit us at www.lifeinsurancestrategiesgroup.com.