For many investors, bonds are supposed to represent safety. Investors understand that stocks are volatile, but bonds and other fixed income assets are supposed to be a portfolio’s anchor. But as we saw last year, that isn’t always the case. The worst return for bonds in nearly 250 years made that apparent. Financial advisors are now facing a quandary on just how to provide the steady returns that many investors crave without the volatility...

Instead, investors should treat a fixed annuity under their fixed income sleeve. Replace bonds with the fixed income annuity. This allows the fixed annuity to fully function as a buffer for portfolios and that helps to mitigate sequence-of-return risk. Research by DPL Financial Partners shows that by allocating 20% of a fixed-income allocation in a 70/30 portfolio to a fixed annuity, the success rate of not outliving your money would jump to 72%, up from about 60%.

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