Select Page

The lede:  Advisors have long had a love/hate relationship with annuities. But with bond yields at such low levels, advisors are often at pains to find other ways of de-risking their clients’ portfolios, especially as they approach retirement. In his latest research, Roger Ibbotson, the economist known for his Stock, Bonds, Bills and Inflation chart, argues that fixed indexed annuities have the potential to outperform bonds in the near future and smooth the return pattern of a portfolio, given their downside protection.

Ibbotson’s seminal work was around the idea that as you take on more risk in a portfolio, you get a higher return. But that risk is volatility, and as one approaches retirement, they can’t afford that lack of stability. 

“I’ve always recognized you have to de-risk, and we see that bonds are not necessarily the way to go today because the yields are so low,” Ibbotson said. “It’s pretty hard to have a falling rate environment today, when yields are below 3 percent on bonds.”

More here:  Ibbotson: Fixed Indexed Annuities Beat Out Bonds (wealthmanagement.com)