Aria Retirement Solutions, which serves a potentially $1 trillion market among RIAs and fee-only advisors with guaranteed income products, has landed a major investment from Polaris Venture Partners, the company announced.
Polaris Venture Partners agreed to make a $4 million investment in Aria Retirement Solutions to help it expand its technology platform for independent advisors. In January, the San Francisco-based Aria introduced the first of its products in a series called RetireOne. The product is a fixed contingent annuity; it assembles a balanced portfolio of no-load mutual funds and ETFs from major companies and combines the portfolio with a guaranteed income insurance contract from Transamerica Advisors Life Insurance.
“This is an exciting platform that is going to enjoy some very favorable demographic trends among boomers moving toward retirement,” said Alan Spoon, general partner of Polaris Venture Partners. “The scariness of recession 2008, the promise of government-sponsored pensions being trimmed, all mean that people’s need to be more self-reliant is more palpable.”
Aria’s product is based on a stand-alone living benefit, which was carved out of a traditional annuity. Transamerica’s insurance wrap provides the benefits of a guaranteed-income insurance product. The no-load investments help keep the product costs low, between 100 and 175 basis points, depending on the ratio of equities in the portfolio. There are four basic portfolio options, none of which has more than 80% invested in equities.
Aria Retirement is betting that those product features will give RIAs a better alternative to variable annuities, which pay commissions to advisors, are more expensive, turn control of the assets to the insurer and significantly limit investment options, said David Stone, CEO of Aria Retirement Solutions.
RetireOne ensures that the assets remain on the RIA’s custodial account, so financial planners and independent advisors can manage the assets themselves. They don’t have to cede control of the investments to an insurance company. The low-cost, passive-style funds also allows advisors to hedge investment risk.
Stone and several other executives at Aria founded the firm after watching advisors’ response to variable annuities.
“We noticed there were about $1 trillion in assets with fee-only advisors who avoided annuities completely,” Stone said. “That was the framework for this company.”
Polaris Venture Partners has shown it's familiar with what RIAs want: The firm has also made an investment in Focus Financial Partners, the New York-based network of wealth management firms.
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