Cetera, Allianz and Capital Group partner on retirement income technology

The new tool will generate a basic income plan that combines guaranteed fixed annuities and traditional asset management models

Jul 10, 2019 @ 3:35 pm

By Ryan W. Neal

Cetera, Allianz and Capital Group are collaborating on a new retirement income tool the companies say will help advisers generate a reliable source of retirement income that lasts the rest of a client's life.

The tool, SetIncome, is exclusively for Cetera advisers. With just five basic inputs from a client — name, age, total income goal, initial investment and risk tolerance — SetIncome will generate a basic retirement income plan that combines guaranteed fixed annuities and traditional asset management models.

(More: Cetera latest to be hit with data breach of personal information)

Advisers can then customize further using life events, additional spending or other sources of income to build a plan that's unique and optimized to each client.

SetIncome will take the features of the recommended annuity and model them against one of 10 asset management portfolios, said Bart Liro, investment director of Cetera's portfolio solutions group.

The investment products available on SetIncome will come from Allianz Global Investors, Allianz Life, Pimco and Capital Group's American Funds.

"Allianz has never worked across those different entities," Mr. Liro said. "That concept was something we wanted to pull in."

Jacqueline Hunt, a member of the Allianz board, said in a statement that SetIncome fills "a critical gap in the marketplace, effectively disrupting the retirement income landscape."

According to research from the Allianz Longevity project, retiring baby boomers aren't developing plans that can withstand market volatility and other unpredictable events, in spite of rising average life expectancies. Just 30% of Americans feel financially prepared to live to 100 years or beyond.

(More: Client longevity is advisers' top retirement planning concern)

Allianz did not respond to a request for additional comment.

"The boomer generation in the U.S. continues to be largely unprepared for retirement: unrealistic in their expectations, and under-saved; with only 55% having any money saved for retirement at all," Cetera president Adam Antoniades said in a statement.

(More: Why healthy clients need to save more for retirement)

Tim Welsh, founder and president of consulting firm Nexus Strategy, was skeptical that SetIncome was anything other than a marketing package to distribute Allianz and Capital Group products across Cetera's network of thousands of advisers.

"There have been annuity planning tools forever, and most if not all financial planning packages have some form of retirement income planning," Mr. Welsh said. "So wrapping up annuity sales through a 'powerful technology platform' is not new, nor disruptive, but if it is done well with pleasing charts, graphs and tables, it can be a helpful sales tool for commission-based advisers."

What makes SetIncome different is that it can model the annuity against the asset management, Mr. Liro said. Other tools on the market only evaluate annuities for the income they provide.

SetIncome also allows for reevaluation to make sure clients are still in the most optimal strategy over time.

"It is creating a custom retirement glide path and it's keeping that adviser in the game," Mr. Liro said.

For Ryan Marshall, a partner at Cetera-affiliated ELA Financial Group, the connection to mutual fund and annuity vendors makes it unlikely he would use the product anytime soon.

"I want to make sure I am making independent decisions for my clients without any influence from investment companies," Mr. Marshall said in an email, adding that he prefers technology products from stand-alone vendors. "I have wholesalers calling our office every day trying to get us to 'use their system,' but I never have and most likely never will."

Mr. Liro responded by saying independent technologies are often losing efficiencies because they can only simulate using broad-based indices rather than the underlying solutions. With SetIncome, advisers can go from a simulation directly to the actual investment product and adapt it over time.

He added that Cetera configured SetIncome to reflect what the broker-dealer feels bring the highest probability of success with a retirement income strategy.

"It's very transparent and clear to a client and end investor what the projected solution can and will do for them, and that allows them to make those decisions," Mr. Liro said.

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