Regional VP-South

I came across an article by Roger Wohlner on Think Advisor this week that I thought was worth sharing. In his article titled, “Where Do Annuities Fit in Your Client’s Retirement Strategy?” Mr. Wohlner talks about how annuities can fit as part of a diversified retirement portfolio by taking expert comments from a recent Morningstar Investment Conference.  

The panel discusses a number of key points including the types of annuity payouts for income using immediate and deferred annuities, pointing out the main issue with immediate income annuities and annuitization of deferred annuities is the lack of control and loss of the asset once annuitized. Deferred annuities with lifetime income riders address this problem by giving control back to the client. They also touch on the evolution of fee-based annuities built for fee only advisors to charge a fee on the annuity account balances the same way they would on managed assets. This gives the client the protection, optional riders, and tax deferral offered by annuities while satisfying the advisor’s business model.

Perhaps the most interesting point of the article is the reminder that financial planning with any product, be it annuities or investment products, is that it’s not all-or-nothing. “It’s not, ‘Do I put everything into an annuity, or do I put everything in investments?’” Annuities should be used as a fixed income replacement, a bond alternative. Funds earmarked for the bond component are best used in annuities to eliminate bond risk to the client and provide guarantees.

For example, annuities can be used in the portfolio to guarantee an income floor in addition to social security, or to maximize social security and to provide a guaranteed yield allowing for more risk to be taken in other parts of the portfolio.

Follow this link to read the full article:

Contact the Experts at Wholehan Marketing to discuss how annuities can be a great fit in your clients’ portfolio.