Financial advisors are seeking innovative investment strategies to offer protection and income amid uncertain rates, while recent market volatility and rising interest rates drive a renewed interest in stable savings options. Advisors are reconsidering the traditional 60/40 portfolio mix and exploring alternatives to enhance retirement income with principal protection.

In 2022, the US faced significant declines in stock sectors and major bond indices due to a challenging interest rate environment. Advisors are reevaluating options to diversify the fixed income component of 60/40 portfolios, with fixed annuities gaining popularity.

Fixed and fixed indexed annuities mitigate market losses, offering advantages such as:

Multi-Year Guaranteed Annuities (MYGAs) feature fixed interest rates and safe savings over specified timeframes, often yielding higher rates than other options, given the current rate climate. They ensure principal and accrue tax-deferred.

Fixed Indexed Annuities (FIAs) and bonds both protect principal and earn interest, but FIAs’ credited interest sources vary, including equity and dynamic multi-asset strategies.

Underlying accounts diversify based on market conditions.

FIAs guarantee principal and accumulate tax-deferred, often providing enhanced lifetime income through optional contract riders.

Looking ahead to 2024, the International Monetary Fund predicts a return to pre-pandemic interest rates, though the recent Federal Reserve rate increase suggests sustained rate decline may take time.

Despite positive inflation trends, LIMRA reports that over half of pre-retirees doubt their guaranteed retirement income will cover basic living expenses.

Advisors should educate clients about annuities, their role in portfolio de-risking, and their benefits in all-weather protection and tax-deferred interest. Overlooked options like fixed and fixed index annuities offer stability, higher rates, and accumulation potential, making them valuable tools for revamping 60/40 portfolios and mitigating market risks.


Contact NFI Solutions for more information about annuities and carriers today!