We recently partnered with Pension & Wealth Management Advisors (PWMA), a Massachusetts-based wealth management firm, to launch a new program for their clients and advisors: PWMA Portfolio Income Insurance. The idea is simple but powerful: take a standard model portfolio and wrap it in a contingent deferred annuity (CDA), thus allowing PWMA advisors to provide clients with lifetime income guarantee that wraps their IRAs, Roth IRAs, or taxable accounts. Income guarantees, of course, are subject to the claims paying ability of the issuing insurer.
By wrapping a portfolio in CDA, PWMA clients can allocate up to 75% equities, ensure a stream of lifetime income regardless of portfolio performance, and even cancel the annuity protection any time if they decide they don’t need it anymore.
Edward Hayes of Financial Advisor Magazine interviewed RetireOne Chief Distribution Officer Jeff Cusack and PWMA CEO George Webb about the benefits of the program:
Most retirees, [Cusack] said, “understand that staying in cash over the long run can be very damaging in terms of the inflationary impact, but they also don’t want to allocate to the markets either because of the perceived capital loss risks associated with it. So they’re caught in between two different kinds of risks and don’t know how to safely navigate that kind of environment.”
George Webb appreciates the flexibility afforded by the program. He can transfer client risk without transferring the asset to an insurance company:
“It is a very streamlined insurance certificate that is attached to the portfolio and provides that lifetime income guarantee,” he said. “The net result is that you end up with an arrangement that is highly transparent, flexible and where you can select the best-in-class providers for asset management and custody.”
