PIMCO last month teamed up with product and technology platform provider Aria Retirement Solutions and insurer Transamerica Advisors Life Insurance Company to market contingent deferred annuities to asset-based fee-only registered investment advisors. The name of the new product? RetireOne Transamerica II.

Yet, the word "annuity" has become a dirty one in the advisory business, with both advisors and investors often resistant to such investment vehicles for their higher taxes, longer lock-ins, and investment restrictions. The success of the partnership will depend on its ability to overcome this obstacle of annuity's reputational "black eye"-an advisor reference-and attract RIA popularity. While the product has the potential to give their clients freedom from financial worry, a valuable consideration in the real world, RIAs question whether the "guarantee" is actually a good deal.

The partnership-with PIMCO, amid its recent losses, taking advantage of Aria's RIA products and lesser-known Aria harnessing PIMCO's-reflects the burgeoning RIA market and the insurance industry's desire to capitalize on it. According to research by Cerulli Associates, RIA assets are expected to account for approximately a quarter of the financial advisor asset market share by the end of next year.

In contrast to a variable annuity, the PIMCO/Aria product portfolio assets remain under the control and management of the RIA, according to David Stone, chief executive officer of Aria. "There is no tax deferral for non-qualified accounts, the fees can be significantly lower than retail variable annuities, and the product design enables advisors/clients to terminate the income guarantee at any time without a surrender charge," said Stone.

"We're the only company to decouple the income guarantee from the investment account, which is comprised of eligible mutual funds and exchange-traded funds. The advisor keeps managing the portfolio and for an additional fee, the client can get a lifetime income benefit that was previously only available through a variable annuity."

Stone added that decoupling, which allows for the invested assets to be custodied away from the insurance company, allows the RIA to have full control over the management of the portfolio.

That guarantee, however, does come at a price. The additional guarantee fee is between 80 and 235 basis points for the RetireOne product, with most portfolios in the 100 to 135 bps range, according to Stone.

So if a 65-year-old man who is ready to retire wraps his $1 million investment account with RetireOne Transamerica, exactly how much would the product guarantee him? At current interest rates that person would be allowed to withdraw $40,000 per year for life (net amount after all advisory and guarantee fees) with the potential for higher annual withdrawals if markets and/or interest rates rise, Stone said.

Also, if held in a taxable account, any earnings withdrawn may also be eligible for long-term capital gains treatment. If the account runs out of money, the insurance kicks in and the insurance company will continue to make the annual payments for as long as the person is alive.

While RIAs acknowledge that PIMCO/Aria's aspect of decoupling has the potential to change how advisors approach annuities, the aspect of a guarantee for life has no meaning unless the guarantee is superior to what investors can achieve by investing conservatively.

The $40,000 per year guarantee for life for the retiree with $1 million shows RetireOne is giving less guaranteed income than what research has already shown to be safe without a guarantee, according to some RIAs.

Michael Kitces, a partner at Pinnacle Advisory Group, said that a guarantee of $40,000 per year from a $1 million account at current interest rates doesn't sound incredibly appealing as a cost-benefit trade-off.

"The safe withdrawal rate research of 4% of your own investment funds already shows that taking $40,000 per year-and adjusting for inflation-has survived any 30-year time period in history," he said.

Kitces said that retiree with $1 million will get less income guarantee from the RetireOne product ($40,000 per year flat, instead of $40,000 per year increasing for inflation) than just investing and spending conservatively, while paying a non-trivial cost for that guarantee.

Other RIAs highlight that the growth in popularity of annuities and other forms of retirement income products has been a result of attempts to capitalize on investor fears of the market, especially following the 2008 financial crisis.

"You could have a non-guaranteed portfolio with 40% stocks, which might give you the same expected final wealth as a guaranteed portfolio with 70% stocks...the difference is peace of mind for the consumer," said Wade Pfau, a professor of retirement income at American College.

While he's generally not a fan of income guarantees, Pfau said they could have uses in cases when they prompt a client to be willing to include stocks in their portfolio as a means of providing downside protection in the years leading toward retirement, or just after retirement when the portfolio is at the most risk.

Morgan Smith, an advisor at Trovena Wealth Management, said that the RetireOne product caters to retirees' emotions, citing the product's lack of surrender charges, inflation protection, and RIA ability to control the assets as most appealing.

"If you invest correctly and keep withdrawal rates within acceptable limits, in many cases you don't need a lifetime guarantee because the portfolio will sustain itself. " he said.

Lukas Dean, a financial planning program director at William Paterson University, echoes Kitces and Pfau's sentiments. Admittedly, Dean said the product does solve some problems of annuities for RIAs.

However, "there are probably cheaper ways to accomplish the same thing with lower fees than this product," he added.

The word "guarantee" has the potential to confuse and blind advisors and their clients, many RIAs noted.

While a guarantee of being able to live comfortably throughout retirement and not being forced to live in your children's guest room may be appealing, advisors and clients must assess every insurance product with skepticism and against the alternatives available.

"With behavioral biases and the attraction to the word 'guarantee,' consumers are often their own worst enemies," Dean said.

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