Retirement income guru Moshe A. Milevsky has sold his retirement analytics firm, the Quantitative Wealth Management Analytics Group, to Cannex Financial Exchanges Ltd., a provider of fixed-annuity data.
Mr. Milevsky, a professor at York University, founded The Qwema Group Inc. in Toronto eight years ago. There it was incubated at the Fields Institute for Research in Mathematical Sciences.
The six permanent employees, along with a group of academic consultants, at Qwema will be moving 20 blocks away to their new location at Cannex's headquarters. Faisal Habib, who was previously chief operating officer at Qwema, will now lead the unit.
Mr. Milevsky would not disclose the size of the transaction, noting that it was a deal that had a cash and an equity component. He has an ownership stake in Cannex, sits on its board and will direct research projects at the firm.
“Cannex has such a far reach in terms of who uses their services,” Mr. Milevsky said. “Right now, it's about getting their pipes to run some of our analytics.”
A big part of Qwema's integration with Cannex will be making Qwema's data accessible so that advisers can model out how annuities will work under a variety of client circumstances. Qwema's specialty is software algorithms and the math that's essential to retirement income planning — for instance, determining the value of an annuity, the best way to allocate products in a client's portfolio and deciding whether a portfolio is up to snuff in meeting its income objectives.
“So for instance, an adviser wants to figure out if the client should get a [single-premium immediate annuity] where they can put in their expectations for interest rates and see what the payout will be,” Mr. Milevsky said.
He said he is happy with the transaction. “This is the transferring of my baby to a larger family.”
With the deal behind him, Mr. Milevsky noted that he will now have more time to work on a major project — a new book that's all about tontines and the idea of embedding tontine elements into retirement income.
Tontines, which date back more than 300 years, are investment plans in which a group of individuals pay a certain sum into a fund in exchange for an annuity afterward. As people in the group die, the value of the payments to the surviving members goes up.
Tontines largely have fallen out of favor because of the fees and potential fraud that could stem from their structure, Mr. Milevsky said, not so much out of concern that participating shareholders would find ways to murder one another.
“In a traditional tontine, there's no insurer taking the risk,” he added. “I think we have to bring them back. They manage risk more efficiently and encourage annuitization.”
