Fixed Annuities Can Help Risk-Shy Clients Diversify

Among the protection features included in many fixed annuities are tax deferral, guaranteed rates of return, guaranteed return of principal and the ability to create lifetime income for retirement, according to Nationwide.

Advisors of affluent women can use the information in the survey to show their clients that the benefits of fixed annuities are two-fold, Benz says. The inherent safety of the conservative vehicle allows the risk-averse to add less safe and potentially higher-yielding investments to their portfolio. This is important because women generally live longer than men are and therefore need more money, and because they plan less for retirement, Benz adds. It is also important because they are a guaranteed source of lifetime income, she says.

"Advisors really need to help women understand that since they're likely to live longer than men, a lack of retirement planning can be devastating," Benz says.

A recent Million Dollar Round Table survey echoes Nationwide's finding that women lag behind men in terms of securing their financial future.

"In a survey of 1,000 American adults, nearly half of all women do not know how much money they will need for retirement – and 56% said they plan to rely on their husband, inheritance or a stock market windfall to support them during their golden years," according to information from MDRT, an association of life insurance and financial services sales professionals based in Park Ridge, Ill.

"Although women are worried about their retirement, they are passively relying on sources beyond their control," says Michelle Hoesly, an MDRT member who specializes in retirement planning. "Even as more women build careers in the business world, young women remain as uninformed about retirement finances as older women."

The MDRT survey supports Nationwide's findings that women's investment style, typically conservative, usually results in a smaller amount to retire with than if they had chosen riskier but potentially higher yielding investments.

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 5, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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