Help Clients Diversify a Portfolio With Annuities

What You Need to Know

Keeping all assets in the market may increase AUM-based fees.
Retirees typically need some guarantees.
Assets with guarantees may help retain equity-linked assets during market downturns.

Over the years, I have met with many retirees who have enjoyed being in the stock market and have enjoyed its many rallies as well as endured its crashes through their working years.

A common problem that I see is that, many times, their investment advisor is only a one-stop shop for securities without regard to safe money options such as annuities.

When the advisor’s client brings up the idea of an annuity, they are either met with a negative view or one or two subpar options for an annuity.

I think this has to do with what the advisor is focused on delivering, and it shows their lack of knowledge of and access to the very best annuity products.

It’s important when providing holistic advice to retirees to focus on their time of life, not just on keeping assets under management for the endless annual fees the assets generate.

How Annuities Can Complement Other Assets

Annuities can be a great option for retirees looking for guarantees as part of their portfolios.

In my opinion, use of products with guarantees makes them better investors in risk-based investments.

When people who are retired have a guaranteed stream of lifetime income coming in that provides for their basic needs and wants, they are not as concerned when the market takes a turn for the worse and the value of their investment portfolio drops 20% to 30%.

Client Desires

When meeting with clients each year, an advisor should not focus only on market diversification strategies.

The advisors should also listen to the needs and wants of their clients. The clients may want more guarantees and less stress in their retirement years.

One way for clients to get guarantees is to buy an annuity that will provide a guaranteed lifetime income stream that they can never outlive.

This type of diversification not only brings peace of mind to the retiree but also to the advisor: The advisor won’t get so many frantic calls in the future when the market takes a dive.

This is how annuity diversification benefits both the client and the advisor.