Products April 19, 2023

State Street, Annexus Retirement Solutions Release TDF With Retirement Income Annuity

Firms partner on “set-it-and-forget-it” retirement investment that includes a guaranteed income annuity.

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State Street Global Advisors and Annexus Retirement Solutions have partnered on a target-date-fund series that includes an embedded retirement income annuity, according to an announcement from the firms Wednesday.

The State Street GTC Retirement Income Builder Series will come with ARS’s embedded Lifetime Income Builder annuity in the TDF’s glidepath as a separate asset class, according to the firm. Global Trust Company will be the fiduciary and trustee of the investment vehicle.

ARS is planning to offer the product early in the third quarter of this year through iJoin, a retirement plan platform provider connected to more than 50 recordkeepers. Once established, those recordkeepers and the plan sponsors in the iJoin network can provide participants access to the TDF through the plan menu or a managed account, says Dave Paulsen, chief distribution officer at ARS.

“The participant has said to us that they want to maintain control all the way to and through retirement,” Paulsen says. “We built this inside of a TDF because the majority of plan participants want [their investing and retirement income setting] done for them, and the target-date does that. … It’s liquid, it’s easy for them and it doesn’t sacrifice growth.”

The Lifetime Income Builder product within the TDF trades like a mutual fund and has a trading symbol, Paulsen says, making it portable across recordkeeper platforms should a participant change provider or a participant leave for a new employer. Paulsen says the model is unique, and that ARS has a patent application pending on the product. He compares it to other, less portable products in which a participant buys an annuity directly when near or in retirement.

“The majority of participants aren’t getting advice from an adviser on how to allocate their assets or buy an annuity,” he says. “We package it and do it all for them without harming growth or adding excess fees.”

Paulsen says the firm is also in talks with two top-tier recordkeeping platforms, with those conversations expected to lead to partnership later this year.

The need to solve the “decumulation” problem for retirement savers is bringing in-plan annuity providers and recordkeepers into conversation across the retirement industry. Communicating the value of annuities in retirement plans to advisers and sponsors has been a key focus area for industry groups such as the Insured Retirement Institute and companies such as Broadridge Financial Solutions’ Fi360, who has put together educational and comparative tools around in-plan annuity offerings.

The new State Street TDF series is designed to mitigate sequence risk—in which a participant sees a drop in savings near or in early retirement—and longevity risk when in retirement by “capturing quarterly high-water marks” on the account value, according to the announcement. The TDFs will target a 6% annual income rate, with the final amount calculated using the high-water mark of the fund.

The Lifetime Income Builder annuity is backed by insurers Nationwide and Athene, with more lined up to join the series, according to the announcement. State Street Global Advisors will provide glidepath recommendations to the trustee, GTC, and manage a portion of the solution’s underlying assets.

State Street and ARS announced a partnership to work on a TDF with an embedded annuity in March 2022.

Deals & People April 19, 2023

Marketer Snappy Kraken, Morningstar Launch Adviser Tool for Personalized Content

The Snappy Kraken Morningstar Wealth Edition gives advisers access to Morningstar research to share with clients.

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Financial marketing firm Snappy Kraken announced the release of Snappy Kraken Morningstar Wealth Edition, a personalized content platform created in collaboration with Morningstar Inc.

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The new platform will give existing Morningstar Office clients access to Morningstar Wealth articles on a custom version of Snappy Kraken’s original content and marketing automation platform.

“One of the many things about Snappy Kraken and the Morningstar Wealth Edition is that all the content is designed to be personalized,” said Robert Sofia, Snappy Kraken’s co-founder and CEO, in an email response.

“For example, if an adviser is sending out an email with a piece of data and some commentary that we’ve written to accompany it, we may prompt them to go in and add their own personalization and/or we may automatically personalize it based on data from the adviser’s profile. The goal is to send the most interesting and relevant content to the proper group of individuals, and that is where our list management and CRM integrations come in.”

If advisers are managing their lists properly, they can deploy the content to those it would be most relevant to, according to Sofia. An adviser may send retirement research from Morningstar to clients who are nearing retirement, but they would not send the same research to clients who are of a younger demographic.

“Let’s say a client comes in and has a specific question about taxes, financial planning and insurance specific products,” Sofia said. “Morningstar likely has research addressing those topics.”

The adviser would be able to utilize the given research, personalize the message and send it to an individual client or to a group of clients.

As the November 2022 SEC marketing rule has tightened restrictions on marketing and giving advice to clients, Sofia said Snappy Kraken follows all rule changes that apply to advisers.

“We adapt our content and our technology to ensure that we help advisors stay in compliance,” he said. “The Morningstar content falls under this same expectation—ensuring compliant measures each step of the way. In addition, we send a lot of our content through FINRA, so we never put our advisors in danger of compliance violations.”

“There are a number of third-party marketing companies which specialize in the financial services space and can be a terrific resource for [advisory] firms as a source of creative and engaging content,” says Alex Egan, director of broker/dealer and investment adviser services at consulting firm Kaufman Rossin, which is not associated with the launch. “However, it’s important to remember for SEC-registered investment advisers, assuming the content meets the definition of an advertisement, the adviser will often become responsible for the content through the SEC’s ‘adoption’ and/or ‘entanglement’ guidance.”

Egan says that use of a third-party company should not be viewed as a way to circumvent the obligations of the marketing rule.

“This means in most circumstances, the adviser will likely retain responsibility for establishing a supervisory framework around the use of such communications to ensure the adviser is satisfying various obligations under the rule,” Egan says.

The new platform is available to users of Morningstar Office. Snappy Kraken clients that do not have Morningstar Office subscriptions can upgrade for a fee of $20 per month per user to access Morningstar Wealth articles.

“We are always looking for opportunities to streamline workflows and elevate the adviser-client relationship,” said Vincent Florack, director of strategic partnerships at Morningstar Wealth, in a statement. “This collaboration with Snappy Kraken will further this aim, enabling advisers to disseminate timely and engaging content that delivers value to investors.”  

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