Tier One Interview: Ken Foley

This month, Jay sits down with Ken Foley, Chief Executive Officer of Spearhead Administrative Services. Ken has spent 26 years in the PPLI market and shares what he has watched too many participants do with that complexity...use it as a sales tool, and share only the information that serves their position. They discuss how Spearhead's model works in practice and how that approach produced $4 billion in assets under administration in four years. They also break down the real difference between separately managed accounts and insurance dedicated funds, and how policyholders should think about the choice. Plus, the infamous restaurant questions. Read on to learn more!

JAY: It isn’t every day that I get to catch up with a person so well-known in the private placement life insurance and fund administration space. Your reputation appears to derive from the trust life insurance companies have in you and your firm, Spearhead Administrative Services, in educating them about the PPLI market and its various counterparties. Let’s start by hearing more about Spearhead and your role in the organization.

KEN: Jay, first, let me thank you and the LISG team for this opportunity, I truly appreciate it.

Spearhead Administrative Services provides customized solutions via the creation and administration of insurance dedicated funds (IDFs) and separately managed accounts (SMAs) in partnership with multi-family offices, registered investment advisers (RIAs) and asset managers exclusively within the private placement life insurance (PPLI) marketplace.

As CEO, my role is to engage with our client partners in all phases, to ensure their desired goals for their respective programs are being met and achieved, and continuing to educate the broader marketplace as to the ‘art of the possible’ as it relates to PPLI and how it could potentially add value to their business and their individual networks.

JAY: Our readers will recall from the Tier One interview with producer Sam Jacobs that I am very nostalgic about South Jersey from my time in law school in the area. You also hail from that region, and I know you will agree that New Jersey is actually two states, North Jersey and South Jersey. In addition to sharing what township you’re from and what Jersey Shore point you frequented during the summer, I am curious about your upbringing and your path to your work with Spearhead.

KEN: Ah! Spoken like someone who has truly spent time in New Jersey! And yes, it is most definitely two different states within one. I was born in North Jersey, but grew up in South Jersey in the Medford and Cherry Hill areas which explains my Philadelphia sports allegiances.

My family moved to the Philadelphia suburbs my junior year of high school, and I then went on to attend Penn State University. After college, I worked at Vanguard for 4+ years. Then I joined, what at that time, was a small boutique insurance company in 2001 located in Blue Bell, PA with 15 employees and $275M of AUM and only offered one product - private placement life insurance. That firm was called AGL Life Assurance Company. I spent 19 years at that carrier, whose name changed over the years from Philadelphia Financial Life Insurance Company to Lombard International, and now is known as Axcelus Financial.

I joined Spearhead Capital in January 2019 and then spun Spearhead Administrative Services out as a standalone company in April 2022.

This is my 26th year in the PPLI space, so basically, I have been doing this half my life!

JAY: As we dig into some subject matter questions, we need to level set about a very important point. You often remind folks that Spearhead is a full-service PPLI asset administrator. Explain what you mean by that?

KEN: When we say “full service” it is a reflection of the different solutions we build at Spearhead, including both custom SMA programs as well as commingled IDFs.

When we partner with an RIA or asset management firm, we’re generally agnostic as it relates to which investment solution we build with them, as no two firms are alike. Normally, through consultation and education, we can help them determine the optimal approach to take in this marketplace.

Part of our job is to ensure that, by helping to build the SMA or IDF solution, it best aligns with the carrier’s requirements, as well as the investment manager’s long-term vision and goals. This enables them to deliver their investment expertise to their clients efficiently through private placement insurance products.

JAY: As an organization, Spearhead is known for arranging the investment component for PPLI, PPVA, COLI, BOLI and I-COLI products. You told me that while this is good to have, it isn’t exactly a differentiator in the market. What is the real value Spearhead brings to its relationships?

KEN: As yourself being a “PPLI OG” like myself, we have both seen folks and firms over the years spread ‘purposeful confusion’ about this marketplace, leading with complexity and fear as its narrative or only sharing enough information on the marketplace that assists them, as opposed to all the information on the marketplace that a firm would want and need.

Spearhead’s true value in the marketplace is our experience, expertise and knowledge. From these traits, important relationships have developed - relationships that allow Spearhead to build successful programs for our client partners. We also provide valuable education and best practices as we engage with RIAs and asset managers.

We package all the above when building programs with our client partners and thus can move any transaction along quite quickly. This commitment has resonated in the marketplace, as Spearhead recently just celebrated our ‘4th Birthday’ earlier this month, and crossed $4 billion in assets under administration at the same time. Four years, four billion dollars.

JAY: Congratulations on those milestones! Let me separate you from your company for a moment. My impression is that a significant contributor to Spearhead’s growth is your, Ken Foley’s, work in simplifying the process for investment advisors to enter the PPLI space. Sometimes I hear from investment firms that they are hesitant to establish a SMA program to participate in PPLI. They fear having to hire more employees and having to spend more on technology. Is this inaccurate?

KEN: While I appreciated the compliment, it is a little tough for me to accept, as our motto at Spearhead is: “Always we, never me”. Teamwork and collaboration always.

The beauty of SMA programs is that they’re designed to closely parallel how advisors operate in the traditional taxable investment world, which includes leveraging their existing technology, custodial relationships, and investment universe inside of the SMA. Our job is to work with each RIA to help them to “lift up” their current investment model as best as we can, with limited to no disruption to their back office and “drop” that same approach inside of PPLI contracts.

Successful firms in this space generally have existing infrastructure, technology, and a support team that we can leverage to build their SMA program together. From there, our goal is to make the SMA program buildout as simple and efficient as possible.

Our goal when engaging with potential new RIA partners exploring a SMA Program, is to make sure they receive all of the available information so they can take that back internally and make an informed decision as a firm. I always say “it is the right time, when it is the right time. Whether that is today or tomorrow”. Only the firm can decide if they want to proceed and when they want to proceed, and our job is to give them all the information and allow them to be comfortable and confident internally to make that decision for themselves.

JAY: Can you break down for me when a PPLI policyholder should consider a separately managed account and when should they elect to invest into an insurance dedicated fund?

KEN: For the policyholder, either approach might make sense depending on their individual circumstances. Policyholders who desire more control over building the allocation inside of their PPLI contract may prefer investing in IDFs, which enable them to pick and choose from a carrier’s approved investments menu in a compliant manner.

That said, if a policyholder has a preferred advisor they work with, desires broader flexibility or a more customized mandate in how the assets are managed, and are comfortable giving up discretion to said advisor, the SMA approach may be more desirable.

The great thing about private placement insurance products is that a policyholder doesn’t necessarily need to be “married” to either approach. PPLI & PPVA contracts allow the policyholder to reallocate within the policy’s separate account as their needs and goals shift over time, without the risk of tax consequences. That can be advantageous as these structures are oftentimes acquired and held for many decades.

JAY: Those who know you and your wife, Heather, understand that you love going to concerts and vacationing in warm climates. How are you spending your free time away from Spearhead?

KEN: We love to travel and experience as much of the world as we can. One of the fun parts of doing this with you was that Heather and I were able to go through years of our travel pictures together, ‘revisit’ those trips all over again, and select a few to share with you for this.

In addition, we are big fans and supporters of live music and enjoy going to see concerts from the smallest venue or club to bucket list venues like MSG, Red Rocks, The Sphere, etc. Our musical taste is eclectic to say the least and spans all genres of music. From Norah Jones, Barry Manilow, & Adele, to Pearl Jam, Metallica & The Rolling Stones and everyone in-between.

When not on a plane or at a concert, we like to spend our free time with family and friends, enjoying that quality time with those that mean the world to us.

JAY: Please rank the following from your top choice to see in a concert to your bottom choice and explain your reasoning: Green Day, Foo Fighters, Blink-182, Weezer and Linkin Park.

KEN: Very nice random selection of musical artists, and luckily, I have seen each of them - some more than once. So here we go:

1. Foo Fighters – tremendous live band, with an endless catalog of great songs, and they really engage the audience from the minute they hit the stage. Have seen them multiple times live, and would highly recommend them

   
   

2. Weezer – so many hit songs, and they play them all. Went through so many CD copies of their debut album Blue Album in college. For some folks reading this, this might be foreign to you, but back in the day you actually had to go to a record store and buy the music in-person that you wanted to listen to.

   
   

3. Green Day – so great live and their songs sound so much better in-person

   
   

4. Linkin Park – only saw them once, but they played with such energy. Have not seen them with their new lead singer. RIP Chester.

   
   

5. Blink-182 – saw them once … sort of. Two years ago, they were headlining one night of a music festival my wife and I attended, and it was pouring rain that night. They decided to come on 45 minutes late and then played for only 25 minutes before curfew forced the end of their set. Drenched Ken was not pleased … what’s my age again?

JAY: This has been fantastic, Ken. Thank you for participating in our Tier One Interview Series. We have arrived at our famous restaurant question, and I understand you have prepared for this question in advance. Without naming a steakhouse or a steak dish, can you give me some recommendations of restaurants I should visit and tell me what I should order when I’m there?

KEN: Perhaps the most important question posed today and I did absolutely prepare in advance for this one!

My wife and I are big sushi fans, and big fans of Nobu. So, during our travels, we first search for a Nobu in that area and if there is a location, we make sure we dine there first thing. It is kind of our thing to knock them off our ‘Nobu bucket list’ and see how many we ultimately get to visit over the years. So far, we have dined at six locations around the world. When you go, you absolutely need to order the yellowtail jalapeno and the Black Cod Miso as foundational selections.

An insider’s tip for your readers is to check with the staff to see what items on the menu are unique to that location, as each restaurant does have select items that are exclusive to only them and not available at the other locations.

A bonus choice for a restaurant was where I enjoyed best meal I ever had - at The Pink Door restaurant in Seattle!

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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.

Spearhead Disclosures:

This material is for educational and informational purposes only and does not constitute investment, legal, regulatory, business, tax, financial, accounting, or other advice or a recommendation regarding any of any fund or vehicle managed by Spearhead, or of any other issuer of securities. Only a definitive offering document can make such an offer. This material does not constitute an offer to sell or a solicitation of an offer to buy any security, insurance product, investment strategy, SMA, IDF, PPLI, or PPVA structure. Any such offer or solicitation will be made only pursuant to applicable offering documents and in accordance with applicable laws and regulations.

Private Placement Life Insurance (PPLI), Private Placement Variable Annuities (PPVA), Insurance Dedicated Funds (IDFs), and insurance dedicated SMA programs involve significant complexity, eligibility requirements, and risks, and are not suitable for all investors. Investment outcomes are not guaranteed, and past experience or adoption trends do not assure future results.

All securities offered through Simplicity Investments, Member FINRA/SIPC. Advisory services offered through Spearhead Administrative Services, LLC. Spearhead Administrative Services, LLC, (“Spearhead”) is a registered investment adviser with the Securities and Exchange Commission (“SEC”). Registration with the SEC as an investment adviser does not imply a certain level of skill or training. Spearhead only transacts business in those states in which it is registered or qualifies for a corresponding exclusion from registration requirements.