P.I.G. Portfolio Income Guarantees - The Non Annuity

Portfolio Income Guarantees are P.I.G.s that are Winners!
Portfolio Income Guarantees are P.I.G.s that are Winners!. By: Ryan McGinnis/Moment/Getty Images

People who say they hate all annuities, but love their Social Security payments are helping define what it means to be a hypocrite.  This hatred for annuities and the annuity sales industry runs deep.  If there was only a product that provided the same guarantees as an annuity, but was not an annuity, it could be the perfect solution for the “annuity haters.”  Well guess what?  It is available. It is sometimes called a contingent deferred annuity, or better yet call it a P.I.G.

Don't be a Hater, Welcome The “P.I.G.” into Your Portfolio

The acronym P.I.G. stands for Portfolio Income Guarantee.  I describe this product strategy as the P.I.G. Strategy, because it is an annuity that’s not an annuity. Annuity haters say they will look at annuities when pigs fly. Well, the P.I.G.Strategy is fly. The P.I.G. provides an income guarantee that you can attach to a stock and bond portfolio.  In other words, you do not need to buy an annuity to get annuity type lifetime income guarantees.  It’s about time!

Currently, there is only one company that has a legitimate product in my opinion.  The company is called ARIA Retirement Solutions, and is led by income visionary David Stone.  When the annuity hall of fame is eventually established, he will be one of the first inductees because of this game changing strategy.  In the future, the P.I.G. strategy will be as common as ETFs and Mutual Funds.

Portfolio Income Guarantees, or P.I.G.s, are Similar to Income Rider Guarantees

As Steve Jobs so brilliantly said, “People don’t know what they want until you show it to them.”  Of course he was referring to the Apple product line, but the P.I.G. falls into this category as well because of its ground breaking design.

The P.I.G. is, in essence, an income rider (i.e. attached benefit) guarantee that is attached to a typical stock and bond portfolio.  An income rider is a lifetime income guarantee that grows while you are waiting to take income, and provides a “floor” return so that you can plan for income needs in the future. 

Portfolio Income Guarantees Have Annual Fees, but Can be Withdrawn at Any Time

The P.I.G. guarantee does come with an annual fee that is taken out of the investment side of the calculation.  At any time, you can cancel the P.I.G. guarantee.  I always tell people that if an annuity sounds too good to be true, then it is with no exceptions.  The P.I.G. is closer to the too good to be true dream than another other strategy in the history of contractual guarantees.

Portfolio Income Guarantees Have Market Opportunity and Liquidity

The current P.I.G. offering does have some limitations as to what type of stock and bond portfolio that you can attach the income guarantee to, but the current choices are pretty good.  It’s sensible that you can’t attach the P.I.G. to an ultra aggressive trading account, but you can still achieve the dream of market opportunity with full flexibility and liquidity.

  Those are two things that commercial annuities don’t offer together, and the reason that the P.I.G. will be an incredibly popular product once consumers know that it’s available.

The annuity industry has earned a bad reputation by allowing bad sales practices to go almost unregulated for decades.  This is a shame because annuities do have their place in some portfolios. They are the only product on the planet that will contractually provide a lifetime income stream regardless of how long you live. If only they were sold for their contractual guarantees instead of the pie in the sky market return fallacies that are being marketed today. The P.I.G. not only offers market opportunity, but liquidity and flexibility. This is one P.I.G. that wants to be led to  the market.

I encourage you to march into your advisor’s office and demand to see the P.I.G.

  If you don’t have an advisor and are managing your own portfolio, go to the ARIA site and take a look for yourself.  Let me rephrase that by saying, take a look at the future.