In today’s volatile, low-interest-rate environment, clients with traditional 60/40 portfolio allocations may find themselves compromising growth potential for the protection they seek. Conversely, the growth clients can achieve through equities can leave them exposed to market loss. Adding an annuity to their portfolio can help you protect their wealth by mitigating market risk, providing them with the opportunity for growth, and offering them protected lifetime income in retirement.
Let’s take a closer look at four reasons to consider annuities for a portion of your clients’ portfolios.
Reason 1: Clients are Seeking What Annuities Offer
The Alliance for Lifetime Income 2020 Protected Lifetime Income Study shows that when it comes to financial security in retirement, a majority of pre-retirees view annuities' main benefits as very important:
- 60 percent value protected income throughout retirement
- 54 percent are interested in having annuities in their retirement plan
- 59 percent believe part of retirement portfolio should be in annuities
Reason 2: An Exclusive Concierge Team to Support You
Prudential is dedicated to helping all financial professionals/advisers build, manage and grow your business. We offer many tools and resources to help forge deeper connections with your clients as you help them plan for a more secure future. Prudential has created an exclusive concierge team—fully licensed in all 50 states—dedicated to supporting RIAs in educating, recommending and selling advisory annuities to your clients. Our goal is to make doing business with us as easy and seamless as possible, both for you and your clients.
Reason 3: Our Annuity Solutions are Customized for the Way You Do Business
At Prudential, we’ve taken our 145-plus year history of providing products and thought leadership that can help clients and advisers mitigate risk and have created solutions that work for you. We’ve listened to the RIA and fintech communities and tailored annuity solutions to the way you do business: with low or no surrender charges, fee transparency and the flexibility to add or remove riders as client’s goals change. And our solutions are now designed to be fee-friendly: you can pull clients’ advisory fees (up to 1.5 percent annually) directly from the cash value of nonqualified, fee-based annuities without negative tax consequences.
Reason 4: Volatility has Shaken Market Confidence
Volatility has had a major impact on the fixed income and equity markets over the past year:
- Since the beginning of the pandemic, there was a drop of over 10,000 points in the Dow, though it has rebounded well
While you have successfully managed your clients’ investments as well as their expectations of the markets under these challenging conditions, volatility has significantly shaken market confidence—including clients’ perception of what their returns should be going forward. Likewise, during this time, unprotected portfolios might have experienced a significant swing in clients’ expected fixed income, adding to their sense of unease.
Adding an annuity to a portion of the portfolio can help mitigate market volatility, sequence of returns risk and longevity risk, and tax considerations. And annuities compliment your business model, offering a level of protection which can help alleviate pressure on other areas of the portfolio.
For these four reasons and more, giving annuities a closer look can be a smart strategy for you and your clients.
Jim Mullery is senior vice president, chief sales and distribution officer of Prudential Financial Individual Solutions Group
Disclaimer: Annuities are issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates. 1045606-00001-00