Using Fixed Annuities to Meet Your Clients’ Investment Goals

Here are some ways you can use fixed annuities to help clients reach their investment goals.

The growth of fixed annuities over the last decade is nothing short of impressive. In the first quarter of 2016 alone, LIMRA reported that fixed annuity sales increased by 48 percent, totaling $32.3 billion in sales.1

This increase in sales can most likely be attributed to the fact that, for many of your clients, a fixed annuity is a hard investment option to beat. That’s because it provides a safe place for a client’s hard-earned dollars. Not only that, one of the biggest advantages of investing in a fixed annuity is the flexibility it provides to the investor. Income options from a fixed annuity are numerous and can be tailored to a client’s specific situation. Clients can opt for lifetime income or income for a certain period, or they can build in survivor income access so their spouse or beneficiaries are provided for after they pass away.

Your clients’ investment goals

When helping your clients evaluate their investment strategy, consider how a fixed annuity can help them meet their investment goals:

• Investment goal # 1: Protecting money. Even though the Great Recession started almost a decade ago, your clients could still be trying to make up for the effects the economic downturn had on their investments. Investors learned that market changes don’t always mean big returns, and as such, have developed a lower tolerance for risk. This, coupled with the fact that people are living longer and need to rely on retirement income for a longer period of time, makes decisions about where to invest retirement dollars increasingly important. Risk adverse clients have found a fixed annuity purchase can help enhance their investment goals. Fixed annuities provide a guaranteed rate of return and are a practical option for investors who don’t want to gamble with money they’ve worked hard to accumulate for retirement. This type of investor may also appreciate how annuities grow on a tax-deferred basis, and are only taxed when assets are distributed.

• Investment goal #2: Growing a sizable nest egg. In addition to protecting an investment, a fixed annuity can help a client accumulate a nest egg. A client can reap the benefits of triple compounding, gaining on the principal amount, interest on the interest and interest on money that would be lost to taxes. In this regard, a fixed annuity can be positioned as a low-risk investment that is guaranteed to grow.

• Investment goal #3: Allowing early access to funds. While saving for retirement, your clients still need access to funds. Life happens, and there may come a time when your clients need to tap into their nest egg. Most investments don’t have flexible withdrawal options to access a portion of the investment without incurring fees, penalties or surrender charges. A fixed annuity has built-in provisions that allow a client access to money after a certain time period, in some instances as early as 30 days after issuance.

• Investment goal #4: Providing a steady income stream. Payouts from a fixed annuity can be