Unlocking the Fixed Annuity: Beyond All-or-Nothing Thinking

Unlocking the Fixed Annuity: Beyond All-or-Nothing Thinking

Financial advisors understand that fixed annuities often face a perception hurdle. Their clients envision handing over most of their hard-earned wealth and relinquishing control, sacrificing legacy for guaranteed income. But this all-or-nothing perspective overlooks the nuanced role these annuities can play in a diversified financial plan.

Speaking at a Morningstar conference, Wade D. Pfau, PhD, CFA, RICP®, founder of Retirement Researcher, offered his suggestions to advisors. "The idea of a tradeoff between meeting a spending goal versus not being able to provide a legacy is misguided," he said. "With the conversation around annuities, it's important to remember it's not all or nothing. It's not, 'Do I put everything in the annuity, or do I put everything in investments?'"

Helping clients see fixed annuities as part of a balanced approach is essential. By providing a secure income floor, fixed annuities enable the remaining parts of the portfolio to meet their other financial objectives, such as growth and flexibility.

Building a portfolio need not be a zero-sum game. Fixed annuities don't have to steal the show – they can be valuable supporting actors, providing income stability while the rest of the investments shine in their own respective roles.

Finsum: Retirement expert helps advisors broaden their perspective on how to discuss fixed annuities with their clients.


  • annuities
  • investors
  • fixed annuities

    The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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