Great-West Inks Sales Pact with RetireOne for Fee-Based VA
With the first phase of the Department of Labor’s fiduciary rule set in motion, more manufacturers of fee-based variable annuities are entering into distribution agreements. Their aim: to connect with financial professionals best positioned to sell their products under a DOL regime, registered investment advisors. Among those joining the bandwagon is Great-West.
The Denver-based carrier has signed a pact with Aria Retirement Solutions to distribute its Smart Track variable annuity on Aria's RetireOne platform. Launched in April 2017, the website and concierge desk offer RIAs a portal through which to access fee-based annuities and insurance products. Aria, which adopted RetireOne as its marketing brand, administers nearly $1 billion of retirement savings and income investments.
Great-West’s Smart Track Advisor, unveiled in the first quarter of 2017, boasts some 90 investment subaccounts. Among those listed in a product prospectus: funds from American Century, BlackRock, Goldman Sachs, Great-West, Janus, MFS, PIMCO and Putnam.
The product comes with three fee-friendly riders: Great-West Secure Income Foundation GLWB Rider, Great-West Secure Income Plus GLWB Rider and Great-West Secure Income Max GLWB Rider. The living benefits offer, among other features, guaranteed income withdrawal rates of up to 6% (starting at age 65), single- or joint-life withdrawals, plus the ability to boost income after withdrawals begin (e.g., through “band income resets”).
Fee-based advisors selling the product can opt for either of two fee options: one that assesses charges outside the annuity contract; the second deducts a fee (up to 1.5%) against the contract. Advisors also have a choice of share class and fee structures. The VA’s guaranteed living and death benefits are also compatible with Great-West’s B-share product.
“We envision becoming a top-five player in the market for fee-based variable annuities in the next 3 to 5 years,” says Michael McCarthy, senior VP of national sales at Great-West. “To that end, we’re building a portfolio of annuities that leverage different strategies for varying needs, objectives and economic environments.”
Great-West is not alone in partnering with RetireOne to expand distribution through fee-based advisors. As reported, Ameritas last month signed a deal with Aria to market its variable universal life and variable annuity products. The offerings include Ameritas Advisor VUL and Ameritas Advisor No-Load VA, the latter of which sports some 60 variable subaccounts, including funds from Dimensional Fund Advisors, Fidelity, RYDEX and Vanguard.
These fund options, and those available on Great-West’s VA chassis, pale in comparison to Monument Advisor, the signature product developed by Jefferson National (now a unit of Nationwide) Long a popular offering with RIAs, the flat fee-based variable annuity sports nearly 400 funds from more than 40 fund families, including 70-plus alternative investments.
While acknowledging the Monument Advisor offers stiff competition in terms of investment choices, McCarthy says that prospects and clients looking for living and death benefit guarantees may find Great-West’s offering more appealing.
“With Smart Tracker, we’re providing a full line of benefits, including a return of premium death benefit for an additional 20 basis points,” says McCarthy. “And all of the options work the same way as they do on our commission-based product [Smart Track II]. We see the product’s ability to guarantee a portion of retirement assets as a real value-add for clients.”
He notes, too, the product’s potential appeal for those angling for a tax play. Barron’s earlier flagged Smart Track Advisor as its number one variable annuity for tax-deferred investing. (Occupying positions two through six in this category were Transamerica (selected twice), Fidelity Investment Life, Lincoln National and TIAA).
McCarthy says Great-West’s partnership with RetireOne is but of one many designed to catapult the carrier to the top five ranking it aspires to. In the past year, the insurer has sealed more than 50 distribution agreements for its VA portfolio, including pacts with Commonwealth, DPL, Wells Fargo and others in the broker-dealer and wirehouse channels.
“We’re looking at other [distribution] opportunities,” says McCarthy. "Of the various agreements, our partnership with DPL looks especially promising. They have hundreds, if not thousands, of advisor relationships we think we can leverage.”