IBD: Want To Be In Business 5 Years From Today? Better Make Time For Tontines

20th September 2017, Investors Business Daily:

Richard Brownstein foresees advances in fintech reshaping retirement planning. While annuities are popular today, he thinks a different product — called tontines — will soon gain traction.

Tontines consist of a group of participants who pay into an investment pool run by an issuer that provides a designated amount every year to all the members as long as they live. When one of the participants dies, the surviving members receive higher payouts.

For Brownstein, the true benefit of tontines flows from the convergence of artificial intelligence and fintech. He predicts that tontines will thrive as issuers adopt blockchains — verifiable, ever-growing digital records of transactions — along with peer-to-peer “smart contracts” that bypass traditional providers of financial services.

“Tontines will be an important part of creating income streams without intermediaries like legacy insurance companies with their brick-and-mortar structure,” he said. “Tontines will help people better than annuities do today. With tontines, the risk is borne by the pool of investors, not an insurance company. Because of the blockchain, that pool is very transparent. And you have the potential for lower costs because the management of all required information and the distribution of funds can be implemented through self-executing smart contracts.”

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