"Most of the annuity world is shrinking and prices are going up. We have the technology to support our system," he says. "The RIA client has no distribution expense and gets a lower tax rate than a variable annuity and no penalty for early withdrawal. We are presenting a better product built for fee-only advisors that we believe advisors will bless."
Stone says Aria has relationships with several hundred advisors and has received a high level of interest in RetireOne.
Investors pay 1% to 1.75% of assets covered by the income guarantee for the insurance wrapper; the fee is lower for portfolios with equal weightings of stocks and bonds and higher for ones with a greater percentage of equities. The fee can drop to 85 basis points for accounts over $2 million.
The income benefit can vary between 4% and 8% of the client's locked in "high water mark," depending on the client's age and the 10-year Treasury rate at the time the first withdrawal is made. The high water mark is the highest value that a RetireOne account reaches, as measured each quarter from the date of purchase. The exact percentage of the benefit is calculated when the first withdrawal is taken.
The older the person and the higher the U.S. Treasury rate, the more likely the person is to hit the 8% maximum benefit. For instance, if a client begins collecting at age 85 and the 10-year Treasury bond yield is 7%, the payout rate would be 8%. If a client begins withdrawals at age 60 and the 10-year Treasury bond yield is under 4.5%, the payout would 4%.
Portfolios are limited to no more than 80% equity with sub-limits on international exposure of 25%, small/midcap exposure of 10%, and alternatives 5%.
Aria received an infusion of cash of $4 million from Polaris Venture Partners, which it intends to use to expand its technology platform for RetireOne and other products.
-Karen DeMasters