As financial planners, we face the crucial responsibility of guiding our clients toward comfortable and secure retirements.
In this journey, navigating the ever-evolving financial landscape and identifying suitable tools for different financial personalities is paramount.
Some alternatives may grab headlines, but fixed annuities deserve a place of quiet distinction in our retirement planning toolkits.
Here are four tips that have helped me evolve my planning. Note that, to use these tips, you need to do enough homework to be comfortable with basic terms such as "period-certain guarantees" and "joint-and-survivor annuities."
1. Unveiling the Value Proposition
Frame the "guaranteed income" advantage.
Start by addressing the fundamental fear lurking in every pre-retiree's mind: "Will my money last?"
Paint a clear picture of how fixed annuities can provide a predictable income stream, replacing anxiety with confidence.
Highlight options like lifetime annuities or period-certain guarantees, to suit individual clients' needs and longevity concerns.
Emphasize market insulation.
Counter the fear of market volatility by showcasing how fixed annuities act as safe havens during economic storms.
Point to studies like the Employee Benefit Research Institute's findings about enhanced financial security with annuity income compared to solely market-dependent portfolios.
2. Debunking the Myths
Challenge the low-return misconception.
Combat the outdated perception of fixed annuities offering meager returns.
Showcase how their guaranteed rates often outperform CDs or Treasury bonds, especially in low-interest rate environments.
Share industry research, like the Stanford Center on Longevity study that demonstrates how annuities can provide equivalent income with less capital than traditional investments.
Address liquidity concerns.
Acknowledge the common worry about limited access to invested funds.
Explain the various liquidity options available in different annuity contracts, such as surrender charges or periodic penalty-free withdrawals.
Stress the importance of tailoring the annuity selection to individual liquidity needs.
3. Unveiling the Customization Toolbox
Spotlight flexible payout options.
Move beyond the one-size-fits-all narrative.
Jeff Poole is the owner of 
