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Merging Mutual Funds, Annuities to Resonate With Retirees

By Editorial Staff

August 26, 2008

Baby Boomers and their financial advisers are going to increasingly look for one-stop-shop solutions that combine mutual funds, annuities and systematic or laddered drawn-down schedules, Investment News reports.

 

“Advisers are looking more at packaged solutions that meet client needs,” said Drew A. Denning, vice president of the retiree services group at The Principal Financial Group. “It makes for a more robust conversation with the client. People don’t realize that by buying the income annuity, you’re not putting the press of the withdrawals on the portfolio.”

 

The Principal recently issued a white paper exploring four best ways to create a retirement income stream: 1) mutual funds with income payments, 2) variable annuities with guaranteed minimum withdrawal benefit riders, 3) income annuities and 4) a combination of mutual funds and income annuities. The firm found that the fourth option offers the lowest fees and addresses inflation, as well, and that the best way to use annuities in a retirees’ portfolio is to ladder them.


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