Pimco has partnered with Aria Retirement Solutions to bring guaranteed lifetime income products to registered investment advisors who recommend Pimco funds to their clients.
Through Aria’s technology, the RetireOne Transamerica platform, clients investing in Pimco funds can "wrap" the account with an income guarantee offered through Transamerica. Aria and Pimco are hosting a series of seminars, workshops and Webinars to educate advisors about RetireOne. For clients, the key advantage is they can get guaranteed income -- the core benefit of a variable annuity -- without having to buy a variable annuity, according to Aria.
“One of the limitations of fund companies is they can’t provide guarantees of lifetime income, they just can’t do it,” said David Stone, chief executive officer of Aria Retirement Solutions. “Historically, fund companies have had to partner with variable annuities or go without the guaranteed income solution. Through Aria’s platform, investors in Pimco funds are now able to keep their assets in Pimco funds and have a guaranteed lifetime income stream.”
Advisors are able to lock in an account's value as it grows with Aria’s technology, according to Stone. When a client is ready to retire, they are able to take the high value and apply it to an income stream for life. If the market goes down the client is protected through Transamerica. “It is very similar to a variable annuity, but we are able to apply this directly to a managed account,” explained Stone.
RetireOne technology analyzes mutual funds/ETFs from custodians to ensure that the managed portfolio is in compliance with the terms of the insurance contract. The fees for the income guarantee can vary based on the funds selected and the overall risk profile of the portfolio. Fees can range from 0.70 percent to 2.35 percent (before breakpoints).
For example, Aria can offer an income guarantee for just 0.70 percent on an account that has all of its assets in the Pimco All Asset Fund. This compares favorably to retail annuities that can be anywhere from two to four times that cost, says Aria.
It is significant, Stone says, because for the first time, the fund industry is able to build customized portfolios in mutual funds that are linked with a lifetime income guarantee were the assets stay with the advisor.
Headquartered in San Francisco, Aria Retirement Solutions was founded by former Charles Schwab and Fidelity executives with the purpose of providing guaranteed retirement income solutions to clients of RIAs operating fee-only practices.