Investment Products and Service Launches


Charles Schwab releases variable annuity options; Vanguard announces plans to launch ultra-short bond ETF; and Annexus Retirement Solutions releases Lifetime Income Builder.

By Amanda Umpierrez
This article was originally published by PlanSponsor

Charles Schwab Releases Variable Annuity Options

Charles Schwab has introduced two new variable annuities.

The Schwab Genesis Variable Annuity is offered directly to Schwab clients and the Schwab Genesis Advisory Variable Annuity is available through independent registered investment advisers (RIAs) who custody assets with Schwab Advisor Services. Both products are offered in collaboration with Protective Life Insurance Co. and have base annuity fees 40% to 75% below the industry average.

“We know costs matter, and flexibility, choice and guaranteed income are highly valued by clients planning for retirement. That’s why we designed Genesis to be among the lowest cost variable annuities in the industry, offering a personalized, tax-deferred growth strategy with a variety of guaranteed lifetime income and death benefit protection options,” says Tina Perrino, vice president, Schwab Income Solutions.

The new products offer a lineup of 63 professionally managed investment portfolios from 12 different fund families, including the Schwab S&P 500 Index Portfolio, which has a total annual operating expense of 0.03%.

In addition, Genesis annuities have no surrender charges and offer optional income and death benefit protection for an additional cost. SecurePaySM Life, a guaranteed lifetime withdrawal benefit (GLWB) rider, is designed to lock in gains annually and provide guaranteed income for life. An optional death benefit can provide purchase payment protection for loved ones regardless of how the market performs.

More information about the Schwab Genesis Variable Annuity is available here. RIAs can find more information about the Schwab Genesis Advisory Variable Annuity here.

Vanguard Announces Plans to Launch Ultra-Short Bond ETF

Vanguard has filed an initial registration statement with the Securities and Exchange Commission (SEC) to launch the Vanguard Ultra-Short Bond ETF.

The actively managed exchange-traded fund (ETF) will offer a low-cost, diversified option for investors seeking income and limited price volatility. Vanguard Fixed Income Group will serve as investment adviser to the new ETF, which is expected to launch in the second quarter of 2021.

“We are excited to present investors with a new solution for managing short-term cash needs and to offer our world-class active fixed income expertise through an ETF,” says Kaitlyn Caughlin, head of Vanguard Portfolio Review Department. “Vanguard’s history of competitive active performance is enabled by rigorous fund oversight, access to a diverse roster of active management talent and our ability to keep costs low.”

The ETF will invest in a diversified portfolio consisting of high-quality and, to a lesser extent, medium-quality fixed income securities, including investment-grade credit and government bonds. With an expected average duration of approximately one year, the ETF’s interest rate risk sits between money market funds and short-term bond funds, offering investors a solution for anticipated cash needs in the range of six to 18 months. It will have an estimated expense ratio of about 0.1%, compared with the average expense ratio for ultra-short-term bond ETFs of 0.22%.

Vanguard Ultra-Short Bond ETF will be Vanguard’s first active bond ETF. Vanguard currently offers the $16 billion actively managed Vanguard Ultra-Short-Term Bond Fund, which debuted in 2015. The new ETF will be separate from, but have a similar strategy to, the existing mutual fund and will offer investors and advisers the ability to trade at intraday market prices and invest by buying one share. The ETF will be managed by the same portfolio management team as the mutual fund.

Annexus Retirement Solutions Releases Lifetime Income Builder

Annexus Retirement Solutions has announced its new solution, Lifetime Income Builder.

Lifetime Income Builder is financially engineered to help participants maximize lifetime income without sacrificing growth opportunity or control. The solution will be available to the institutional retirement planning market in mid-2021, with insurance carrier and asset manager partners to be announced throughout the year.

Lifetime Income Builder is designed to help participants generate the most retirement income from their defined contribution (DC) plan and eliminate the risk of outliving their income by embedding a guaranteed lifetime withdrawal benefit directly into a target-date fund (TDF) or managed account.

The solution is designed to deliver on three key differentiating factors: higher lifetime income, an automatic participant experience, and full liquidity and portability for the life of the product.

“Over the last 20 years, products that have attempted to deliver lifetime income inside a defined contribution plan have been fundamentally flawed,” says Dave Paulsen, a senior adviser at Annexus Retirement Solutions. “They didn’t approach the challenge by first understanding truly what each participant needs. Annexus Retirement Solutions started by placing those needs first and addressing barriers to participant adoption, including prohibitive costs, overly complex solutions, sacrificing returns and surrendering access to their money. Lifetime Income Builder has shifted the paradigm by confronting these issues through innovation and is designed to provide the best financial outcome for plan participants, ultimately helping them become more retirement ready.”

“Since the passing of the SECURE [Setting Every Community Up for Retirement Enhancement] Act in 2019, there has been a lot of conversation about annuities in plan. When you look back historically, several products have tried to solve the lifetime income challenge in-plan, with little to no success,” says Charles Millard, a senior adviser at Annexus Retirement Solutions. “These solutions took existing products and made them available to provide lifetime income in 401(k) plans, without evaluating the plan sponsor’s and participant’s experience. With Lifetime Income Builder, we’re aligning product innovation with industry regulations along with the plan sponsor’s and participant’s experience to transform how Americans achieve a secure financial future.”

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