Asset Protection Tops Portfolio Growth in New Advisor Survey

“Far fewer selected ‘running out of money’ as a client concern, perhaps partly because all respondents utilize annuities in their practices and 80% reported having sold at least three annuities in the past 12 months,” the report notes.

Conclusions and Considerations

As the survey results show, inflation is at the forefront of the minds of many clients, particularly those who may already be retired or approaching retirement.

“Inflation is tantamount to a pay cut for those trying to meet expenses using income from investable assets, and either more must be taken from savings or cuts in spending must be found to offset its effects,” the IRI says.

Thus, it is critical to have at least some portion of retirement portfolios invested in risk assets with higher growth potential to keep pace with inflation. This portion of the portfolio can be complemented by an allocation to annuities, according to the IRI, which can help provide ease of mind for clients who are more risk averse.

“Advisors can use annuities to protect assets and generate guaranteed lifetime income from client portfolios, the two aspects of investment products in which advisors who use annuities say their clients have the highest interest,” the IRI reports. “Annuities that provide both market growth and downside protection may have lower upside potential than investment products without such protection, but maximizing growth is the lowest priority for many clients.”

Even guaranteed growth, despite having more client interest than maximized growth, takes a back seat to protection and income, the IRI finds.

“Annuities can essentially meet clients at the intersection of protecting what they have and providing growth to address their top financial concerns,” the report concludes. “Annuities help advisors align goals, concerns and risk tolerance by providing protection and securing income.”

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