The New 60/40: Replacing Bonds with Fixed Indexed Annuities

Financial market upheavals and bank instability have left Americans feeling uncertain about the safety of their money. Recent failures of large banks have had a mobilizing effect on investors nationwide. American consumers, now fearful of depositing money into their once-trusted bank accounts, are in search of safe havens for their money.

But it wasn’t just the recent banking failures that caused concern. As the Federal Reserve raised interest rates, banks didn't do the same for depositors. Deposits overall had been in a steady decline over the past year. Combined with rising interest rates, less competitive investment rates for bank accounts offering next to nothing returns and the fear of further failures, many people have decided to park their money elsewhere.

Fortunately, there are ways to protect and grow your clients’ hard-earned and astutely saved assets without taking on too much risk: Replacing volatile traditional bank bonds with more durable and dependable fixed indexed annuities (FIA).
FIAs pay an interest rate based on the performance of a market index, such as the S&P 500. However, money isn't invested or exposed to the market. It’s a blend of other annuity types and applies beneficial elements of each. The FIA offers the protection of a fixed annuity with the potential for growth like the index annuity.

What is the old 60/40?

The old 60/40 portfolio is a 71-year-old investment strategy, first proposed by Nobel Laureate Harry Markowitz in 1952. The strategy involves investing 60% of a portfolio in stocks and 40% in bonds.

It's an easy-to-follow approach to diversifying investments — but it comes with a significant amount of market risk. The 60/40 has been popular for decades, but with recent changes in the financial landscape, it may be time to rethink our strategy.

In “The New 60/40,” you’re replacing bonds with FIAs, which can offer more market protection and more robust growth opportunities. For example, whereas bank CDs carry a 3% to 10% financial reserve, FIAs are a 100% financial reserve product, which allows investors to access all their funds at any time, without any restrictions or limitations. Being a 100% financial reserve product allows investors to keep their funds in a safe, secure and liquid form, while still earning an attractive return. A 100% financial reserve product offers investors the ability to access their funds immediately and with no hidden costs or fees.

FIAs can help clients protect their principal and generate market-like gains without financial market risk. They can help to generate important retirement income without having to withdraw funds from the growth portion of a portfolio. This makes FIAs an attractive option for those looking to protect their retirement savings and build income.

Download our Fixed Annuity Quick-Reference Guide here.

Check out our Top Multi-Year Guaranteed Annuities here.

Remember, selling fixed annuities involves working with individuals' financial well-being, so it's crucial to act ethically, provide accurate information, and always prioritize the best interests of your clients.

You can review our Annuity Product Portfolio here. You can also call us at 800-998-7715 and speak with one of our marketing representatives to assist with any questions.