5 Types of Clients Who Should Consider Annuities

Too many advisors still avoid having the talk with their clients about the “‘A’ word.” Clients, on the other hand, are often looking for some of the benefits offered by annuities, even if they aren’t specifically asking for them by name.

What the client says:

  • “I’m afraid that I’m going to outlive my money.”
  • “I’m afraid that I’m going to become a burden to my children.”
  • “I’m afraid that if I enter into a critical care situation, I won’t be covered.”


  • “Please educate me on the pros and cons of adding annuities to my portfolio.”

These very common fears create perfect opportunities for an advisor to educate clients about the income protection solutions and other potential benefits of annuities.

Adding annuities to a portfolio can be beneficial for various types of clients, depending on their specific financial goals and circumstances.

The Types

Some clients may not need annuities.

Here are some, but not all, who might benefit from incorporating annuities into their portfolios:

1. Retirement savers: Individuals who are approaching retirement or are already retired can benefit from annuities, as they provide a steady stream of income during retirement. Annuities can act as a form of longevity insurance, ensuring that clients won’t outlive their savings.

2. Conservative investors: Clients who have a low tolerance for risk and prefer stable, predictable returns may find annuities attractive.

Some annuity features offer a guaranteed income stream, protecting against market volatility and providing a sense of financial security, while other annuities can help reduce the impact of down markets on the account value.

3. Tax-efficient investors: Annuities can provide tax advantages for clients seeking tax-deferred growth.

Earnings in annuities are not subject to immediate taxes, allowing the invested funds to grow without annual tax implications.

However, it’s important to note that annuity withdrawals may be subject to taxes when distributed.

4. Estate planners: Clients interested in leaving a financial legacy for their beneficiaries may find annuities useful.

Certain types of annuities, such as deferred annuities with death benefit options, can provide a guaranteed payout to beneficiaries upon the client’s passing.

5. Asset diversifiers: Clients looking to diversify their sources of income can consider annuities.

By incorporating annuities alongside other investment vehicles like stocks and bonds, clients can create a well-rounded portfolio with a combination of growth and income-focused assets.

Moving Forward

Advisors who sit on the sidelines when it comes to offering annuities have many excuses.

At the top of that list is the complexity involved with offering this type of product.

The good news is, thanks to innovation, there are more and more options available for simplifying and streamlining the annuity sales process.

Today, holistic financial planning services that address a client’s entire financial picture are no longer a nice to have, they are a need to have if advisors want to avoid losing clients and gaining new ones through referrals.

This means they should have the necessary tools to bring the annuity talk to the table.

Advisors should be able to easily start a conversation with clients about the pros and cons of adding annuities to a portfolio.

Now is the time for advisors to give annuities the awareness they deserve all year long — not just for one month — by embracing the changing landscape and adapting their practices accordingly.

By leveraging technology and innovative solutions, they can overcome the complexity barrier and confidently incorporate annuities into their clients’ financial plans.

Michael Kazanjian is the chief marketing officer of FIDX, a firm that helps wealth managers use insurance products in retirement planning.

Published on Think Advisor

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