Fixed Annuities Can Help Risk-Shy Clients Diversify
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There’s nothing exciting about fixed annuities, which makes them very attractive to certain investors, according to Nationwide Financial, Columbus, Ohio.
The findings of a recent Nationwide survey suggest that the conservative qualities of fixed annuities – an investment vehicle offered by insurance companies – make them an ideal fit for a risk-averse demographic: affluent women.
The 2001 Nationwide Financial Survey polled 500 people younger than 60 with an annual income of more than $150,000. Results indicate that women are less knowledgeable than men about specific financial products, and are less inclined to take substantial financial risk.
So, an advisor whose client is skittish about taking risks might have an easier time creating a balanced portfolio for her if he adds fixed annuities to the mix, says Michelle Benz, vice president and product manager for fixed annuities, Nationwide.
Using the information from the Nationwide survey, advisors can help their clients understand the benefits of a balanced portfolio, Benz says. They should “take into account what the client is comfortable with, encouraging them to balance their portfolio with fixed annuities, which helps the client feel more comfortable taking risks with other money.”
“Fixed annuities can make a lot of sense for wealthy women who’ve maxed out 401(k) contributions,” she says. Fixed annuities include “options that give risk-averse investors peace of mind enabling them to take more risks with other money.”