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Fidelity to Add USAA Income Annuity

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Fidelity Investments has added a single-premium immediate annuity (SPIA) from USAA Life Insurance Company to the income annuity menu at its Fidelity Insurance Network program.

A SPIA contract gives the purchaser a way to convert one big payment into a stream of income payments that starts right away.

(Related: Fidelity Expands Thematic Lineup to 16 Funds: Portfolio Products)

The typical purchaser is a newly retired consumer who’s moving assets out of a 401(k) plan or other retirement plan.

USAA and Fidelity Investments

USAA Life is an arm of United Services Automobile Association, a San Antonio, Texas-based financial services provider that has focused on serving armed services members and their families. The company’s SPIA contracts and other life and annuity products are available to members of the general public as well as service members and their families.

Fidelity has been offering a wide range retirement income planning services for decades. In 2001, for example, it began offering clients a formal retirement income planning worksheet.

Fidelity is administering about $7.8 trillion in assets, or about 3% of the total financial wealth of the United States.

Steve Patterson, a Fidelity executive, is the 2019 chair of the LIMRA LOMA Secure Retirement Institute.

SPIA Strategy

The Fidelity Insurance Network now offers SPIA contracts from a total of six insurers. In addition to USAA, the list of issuers includes Guardian Life Insurance Company of America, Massachusetts Mutual Life Insurance Company, New York Life Insurance Company, Principal Financial Group Inc., and Western & Southern.

USAA appears to be taking a cautious approach to selling contracts through Fidelity: The company has started by setting a $20,000 investment minimum for the SPIA available through Fidelity, according to the Fidelity Insurance Network website. The other providers on the menu have set a $10,000 investment minimum.

USAA is also limiting the optional scheduled annual income increases to 3%. Some of the providers on the Fidelity SPIA menu let purchasers set annual increases as high as 5%.

Bill White, general manager for retirement products at USAA, said in a statement that USAA Life believes the new relationship with Fidelity Investments will make the company’s financial strength available to more retirees.

“Both companies are well aligned with regard to providing high quality financial planning and advice, as well as recognizing the importance of offering quality annuity solutions as part of an overall retirement plan,” White said.


The Fidelity Insurance Network SPIA comparison page is available here.

— Read Why Do People Hate Immediate Annuities?, on ThinkAdvisor.

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