• Relay

Building a better annuity

Relay, a new user-friendly fintech offering rewards consumers for smart everyday spending

Building a better annuity

Fintech innovations tend to follow a pattern of increasing sophistication and value. Consider the dawn of the web when internet stock trading made it cheap and easy for individuals to buy and sell equities. Today, robo-advisers have pushed the ball further down the field, making it cheap and easy for individuals to build diversified long-term portfolios.


Saving and budgeting tools are on a similar trajectory of innovation. For years, apps such as Mint have helped consumers get a handle on their saving and spending habits. Now new tools are bringing fintech to the next level, tying saving and budgeting to produce concrete benefits. Take Relay, which helps consumers make the most out of the money they’ve earmarked for future expenses. Relay combines an immediate annuity with a Visa prepaid card that offers cash-back rewards of 3% to 13% on eligible purchases.

“Insurance products, like annuities, are usually something people buy to establish a safety net, and as such are often a ‘set-it-and-forget-it’ kind of deal,” says Andres Barragan, chief experience officer of Group One Thousand One, which operates Relay. “We wanted to offer an annuity product that was more desirable and one that people would want to use every day because of the great value it provides.”


Financial companies have a decades-long history of technological innovation to make consumers’ lives simpler, from direct-deposit ATM machines to mobile payment systems. “Now, we’re seeing an acceleration of financial technology because of the ubiquity and power of smart phones,” says N.K. Chidambaran, an associate professor of finance at the Gabelli School of Business at Fordham University who specializes in fintech.

Yet, as more products arrive on the market, companies are striving to find new ways to appeal to consumers, not only by making banking and investment decisions easier, but also by offering smart benefits.

During Relay’s research-and-development process, survey subjects were asked to consider how regular payouts and rewards such as cash-back rates of up to 13% would fit into their lives. One respondent described earning cash back on money as a “no-brainer,” adding, “You know you’re going to spend it, why not earn money for it?” Additionally, survey subjects were intrigued by the way the product felt like a “life hack” or “outsmarting your money.”


“By making a better product with digital tools, you can make something that’s about fitting a lifestyle rather than just investing or banking,” Barragan says.


Traditionally, annuities can be fairly inflexible financial products, tying up consumers’ cash for long periods of time and subjecting them to harsh penalties for early withdrawal.

Relay offers consumers more flexibility than with traditional annuity products. Consumers decide the size of their monthly payouts and then make a corresponding one-time lump sum payment to purchase a Relay Planned-Spend Account, an immediate annuity issued by Guggenheim Life and Annuity Company. The size of the lump sum and payout are customizable, though customers can also choose from pre-built plans. What’s more, Relay customers can withdraw their money at any time without penalties.

Monthly payouts from the annuity are loaded directly to a prepaid card. Users can use their payouts for regular expenses, like utilities or groceries, and can save for larger financial goals—such as a vacation—by letting the payouts accumulate.

Relay was designed to give users easier access to their accounts. Customers can keep track of their activity online or via the Relay app, which provide account information, balance statements for the Relay prepaid card, and pending and paid cash-back rewards. Chidambaran notes how consumers today demand such easy access to their financial information. “Consumers value technologies that are time-saving, enable them to make good decisions, and allow 24/7-access to money and information,” he says.



Beyond flexibility, the Relay team wanted to address what they saw as a lifestyle issue to help consumers save and budget better. “We were seeing volatility in the market, and people were getting nervous about their money and holding it in cash,” Barragan says. “But that cash wasn’t working hard enough for them. We wanted to build something that was more rewarding so people weren’t leaving money on the table.”

According to Bankrate, the average checking account interest rate hovers around 0.06%, and top rates max out around 2%. In addition to earning interest on the cash balance of the annuity, Relay offers customers cash back, which is determined by the specific plan they choose. For example, if a customer chooses a five-year plan, the cash-back rate for the first 12 months starts at 5% and increases by one percentage point each year for the rest of the plan. Users earn 9% cash-back by year five.

“With Relay,” says Barragan, “we wanted to go beyond traditional annuities or banking products and offer a lifestyle tool that rewards consumers for their financial discipline and makes them feel like they’re getting a better deal on what they’re already spending on.”

This story was created for and commissioned by Relay.


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