“If only those assets had been protected by some kind of guarantee…” Such a lament might not be nearly as common had assets resided in a hybrid managed account with an insurance guarantee.
Products with income and withdrawal benefits, such as variable annuities, were gaining popularity even before the market tanked. And their appeal has only grown with the deepening of the financial crisis. In response, firms that design managed-money instruments are packaging managed accounts with optional insurance guarantees that protect against downside risk.
The guarantee is structured much like a VA guaranteed withdrawal benefit. Underpinning it is an agreement between the asset manager and an insurance carrier, whereby the insurer agrees to underwrite the guaranteed income feature provided the asset manager adheres to a prescribed asset allocation program.