A “hands-free” approach to promoting diversification in your annuity

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Including a variety of investments and savings vehicles in your portfolio can be a helpful approach to minimizing risks and protecting a portion of your assets within your overall retirement plan. One way you may have created a diversified financial strategy is through the addition of a fixed indexed annuity (FIA). FIAs can offer many benefits, from growth potential to providing protection from loss due to market downturns. But when you’re looking to balance protection and growth potential within your FIA, how do you know which index options to choose? And when is the right time to rebalance to keep your goals on track? Here’s how using an automated strategy within your FIA can simplify this decision-making process by taking advantage of in-depth research and insight. 

“Set and forget” allocation strategy

By automatically rebalancing your FIA allocations across growth and protection options, an automated strategy offers a more hands-free approach to reallocation. Think of it like auto ship on many online shopping sites. When you select this option on an item you use regularly, the item will automatically be purchased and shipped every 30 days, freeing you from having to remember to re-order every month. With an automated strategy, you choose from pre-built interest crediting options based on your needs and preferences. The preset allocations then diversify across indices and automatically rebalance at the renewal dates, allowing you to “set and forget” an allocation strategy. 

Since your account value is reallocated on each contract anniversary, you can:

  1. Help stay aligned with your risk and return goals
  2. Take advantage of improved performance potential
  3. Help save yourself time and effort

Gain additional growth potential 

Each option locks in gains at the end of every one- or two-year term, so any gains you earn cannot be lost due to market downturns, giving you higher growth potential. If you choose a preset option that offers more growth potential, you may be able to take advantage of a strategy called laddering. 

Here’s how it works:

  • Year 1: Allocate between 1- and 2- year strategies
  • Year 2: At end of the first contract year, your 1-year strategies will reallocate into another 2-year strategy 

This method alternates two-year strategies and helps you gain growth opportunities without having to manage your allocations every contract anniversary. You effectively get credited every year on your contract, but you’re able to take advantage of two years of growth potential.

Chart showing how alternating, or “laddering,” two-year strategies can provide the growth potential of a two-year strategy with the potential for interest credits each year.

To decide if an automated approach within your FIA is a good fit for your diversification strategy, contact your financial professional to learn more about “hands-free” indexed crediting options and how you can further promote diversification in your annuity. 

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