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As an asset class, cash generally elicits one of two responses from investors: “cash is king” or “cash is trash.” Most of your clients probably are in one camp or the other, while some may be conflicted. 

On the one hand, they may see the positive benefits of holding onto cash — shielding against the unexpected or having more flexibility to invest as opportunities arise. In light of recent market volatility, cash may feel like a safer bet. 

On the other hand, they may harbor a genuine fear of missing out on investment returns and resulting portfolio growth. After all, if markets are down, they may go back up, right?

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When consulting with clients, it’s easy for advisors to get caught up in conversations about portfolios, emerging financial trends and news about inflation or market volatility. What might not enter the conversation is a discussion surrounding a client’s credit rating or credit report.

Do your clients understand the role their credit ratings play in their financial outlooks and that lower credit scores generally mean it will be more costly to borrow? Are they aware of their current credit score? Do they realize who can and cannot view their credit report?

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The fear of outliving one’s wealth exerts a powerful force against retirees’ confidence as they navigate life’s milestones. Considering the likelihood that today’s average 65-year old man may live to 84 and a 65-year-old woman to 86.6, many clients have good reason to look for ways to help make sure their money lasts as long as they do.¹

Whether they’re risk-averse investors or they feel less than fully confident about their ability to manage their own money in retirement, some clients may achieve a greater sense of security by adding annuity products to their portfolios.

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When weighing the risks and benefits, many of your clients would rather have portfolio protection with growth potential than portfolio performance that is susceptible to market volatility.

This preference likely aligns with how many financial advisors approach clients’ investment and retirement planning strategies by prioritizing risk management and wealth preservation.

On its surface, this alignment suggests harmony; clients generally want protection and advisors are willing to provide strategies accordingly. For investors who are already in higher wealth tiers and simply want to live off existing assets, this approach may be appropriate. 

However, those investors with fewer investable assets might lack sufficient savings to fund retirement in spite of being cautious about preserving their accumulated wealth and minimizing risk.

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