Laddering Annuities in a Wildly Volatile Market

byRob Wick

Way back since the invent of bank CDs, clients and advisors alike have been laddering their CD. Why you may ask? Longer duration solutions provide better rates of return but the longer your client is “locked” into a solution, the more they could potentially miss out relative to market conditions. In most cases CDs were laddered for a “blended rate” as well as the ability to move those assets when they come due. In today’s interest rate environment, bank CDs are not offering much in terms of return. With that in mind, when was the last time you considered a multi-year guaranteed annuity(MYGA)?

Much like you would have laddered a CD portfolio, you can do the same with a MYGA. Two-, three-, and four-year MYGAs are offering rates much more competitive than bank CDs. For clients that are “on the fence” with regards to current market conditions and are looking for safety and a guaranteed rate of return, you should consider the laddering MYGA solutions. If/when we have a market correction, your clients would be able to slowly move back into potentially higher earning opportunities.

With regards to durations longer than four years, you may consider looking at both five- and seven-year fixed indexed annuities, as the potential returns could be significantly higher than that of MYGAs. While neither the FIA or MYGA laddering solutions are intended to “blow the socks of the accumulated value,” they will offer your clients peace of mind from a market downturn. Are they willing to receive conservative returns knowing that their dollars are never at risk due to loss? This becomes an extremely important topic of conversation with your clients especially within the preservation stage of retirement or pre-retirement.

To discuss this or any annuity-related topics, please contact me at (720) 943-1616 or