No-Commission Annuities as a Substitute for Low-Yielding, Investment-Grade Bonds
September 16, 2020 by Rajiv Rebello
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In a low-yield environment, advisors need to use financial planning tools like no-commission annuities to improve after-tax, after-advisory fee bond returns.
A large bond allocation has long been the staple diversification tool for advisors to hedge market risk in their equity portfolios – especially for clients nearing retirement. In high-yield environments, this is an excellent tool. Advisors can either hold the bonds to maturity and benefit from the high fixed income yield, or they can sell the bonds as yields decrease, thereby allowing for capital appreciation on the assets. In a high-yield environment, bonds are great assets by themselves, independent of the diversification benefits they provide.