Fixed income strategies in times of volatility

Fast-moving government policy changes, inflation, and interest rate volatility have created one of the most unpredictable financial environments in decades. According to a recent Allianz survey, Americans today are increasingly worried about running out of money, indicating a need for stronger retirement strategies.¹ That concern is well-founded, as many investors are unsure if their traditional portfolios will keep up in a shifting landscape. In a climate of uncertainty, risk-adjusted returns matter more than ever. So does something less tangible but equally critical: client peace of mind.

Stability is the new priority — and a new opportunity

Not surprisingly, the actions of retirement investors show that many are prioritizing safety:

Last year saw a record number of annuity sales across the country.²
Flourish data and surveys show significant cash allocations across RIA clients, with high-net-worth clients often holding more than 20% of their assets in cash.^||

The message is clear: clients are no longer just looking for higher returns. They are increasingly seeking stability and protection from forces outside their control.

This is why cash management strategies and annuities are playing a larger role in modern portfolios today. These products can offer a level of security that traditional fixed-income investments cannot match. While some advisors have adapted to this shift, others remain hesitant. Yet a significant opportunity awaits those willing to modernize their approach. By focusing on updated fixed-income strategies, you can better address client concerns and differentiate your practice.

Is the 60/40 portfolio dead?

For years, the 60/40 portfolio has been a trusted baseline. However, many investors question its relevance in a world where stocks and bonds move in closer correlation and inflation pressures complicate the equation. That doesn't mean the entire premise should be tossed out, but it does raise the need for reflection.

More than anything, this debate highlights the pressure advisors face today. In uncertain markets, many clients are seeking more reassurance that their financial futures will be stable — and appreciate advisors who can provide solutions to create certainty while ensuring that their financial lives remain simple. Rather than focusing solely on asset class mixes, advisors can create more value by refocusing the conversation on client goals and intentionally building greater stability into the overall plan.

Asset classes like cash and annuities merit renewed attention for those seeking more predictable income and capital preservation. They can offer the kind of certainty that more traditional fixed income strategies can’t.

Revisiting the role of cash in today’s market

Cash has reemerged as an essential component of client portfolios. Flourish's platform data shows that RIA clients hold significant portions of their assets in cash. The reason is simple: cash offers liquidity, principal protection, and psychological comfort that few other assets can match.

For clients navigating volatile markets, cash can serve as a powerful emotional buffer. It reduces the perceived urgency to make drastic portfolio changes and helps clients feel more in control. Like any asset class, cash comes with tradeoffs. The primary concern is opportunity cost; in high-inflation environments, holding too much cash can erode purchasing power. That's why integrating cash strategically, rather than parking it indefinitely without a plan, is important.

Here are a few advisor-led strategies for incorporating cash into a fixed income plan:

Use it as a volatility shield: carve out a 12- to 18-month reserve to avoid forced sales during downturns.
Segment for goals: earmark cash for short-term objectives like home repairs, tuition, taxes, or large purchases.
Combine with tools like Flourish Cash^† to provide competitive-yield alternatives to traditional savings accounts.

Ultimately, the goal is to help clients hold cash intentionally, as part of a comprehensive plan—not out of fear.

The power of annuities for long-term security

Annuities are also reentering the fixed income conversation with new relevance. Industry-wide, annuity sales continue to break records and reached historic highs in 2024.³ Economic uncertainty is on the rise, and the product landscape has evolved to meet growing demand. Advisors now have access to fee-based, fiduciary-aligned annuity solutions built for integration into retirement portfolios.

With Flourish Annuities,^∫ advisors can easily add fee-based annuities to portfolios to help reduce uncertainty and achieve client goals, including:

Multi-year guaranteed annuities (MYGAs) for a fixed return over a defined period, offering stability without the interest rate risk of traditional bonds or bond funds.
Fixed indexed annuities (FIAs) for principal protection with the potential for market-linked growth; ideal for clients seeking growth with complete downside protection from market losses.
Registered index-linked annuities (RILAs) combine upside potential with defined downside protection, giving clients more control over risk and reward.
Investment-only variable annuities (IOVAs) can provide tax-deferred growth with access to a broad range of investment options.
Income annuities with a guaranteed lifetime withdrawal benefits (GLWB) for clients looking for the option of a predictable stream of income for life, while looking to maintain access to their funds.

As longevity risks weigh on financial plans, increasing a client’s level of confidence about retirement can have a significant impact on their peace of mind. Studies suggest that retirees with predictable income sources experience lower stress levels and greater satisfaction in retirement.⁴

That said, the value of annuities often hinges on how they're positioned. Advisors can play a crucial role in helping clients understand annuities more clearly by framing them as part of a holistic portfolio, not as a standalone solution. For example, an advisor might work with a client to shift a portion of her equity portfolio into RILAs or FIAs for the years surrounding retirement to mitigate sequence of return risks, rather than needing to dramatically increase fixed income allocations to achieve the same target volatility. Additionally, education around the ability for modern annuities to complement other income sources, such as Social Security or bond ladders, can help clients understand their use cases and feel more empowered in their financial decisions.

Building more resilient fixed income portfolios

Today’s markets are more complex than ever, but clients’ needs remain relatively simple. Most want safety, income, and flexibility—and integrating cash and annuities into fixed-income strategies can help deliver all three.

Rather than relying on traditional asset allocation models alone, advisors today have an opportunity to tailor fixed-income plans based on the specific risk tolerance, time horizon, and cash flow needs of each client. In doing so, you have the ability to deliver more stability and assurance, helping clients feel more secure during periods of market stress.

This isn't just smart planning. It's also a powerful way to differentiate your practice in a crowded marketplace. Taking a holistic view of client cash, including the assets that traditionally sit in checking and savings accounts, while also integrating annuities is an important step. But the real opportunity lies in expanding these conversations beyond the portfolio review.

By weaving cash management and annuity strategies into your educational approach, client communications, and marketing efforts, you can position yourself as a forward-thinking advisor. One who not only understands today’s environment, but also knows how to act on it.

When clients and prospects see that you are proactively addressing key concerns like stability and retirement income, it builds trust and credibility. This approach also opens the door to deeper conversations, better-aligned portfolios, and stronger long-term relationships. A win in all economic landscapes.

Key takeaway

It is increasingly clear that clients today are searching for clarity, control, and lasting confidence in their financial plans, while for advisors, this moment represents a critical opportunity. As the traditional fixed income playbook evolves, cash and annuities are no longer optional tools; they are now essential elements of a modern, resilient fixed-income portfolio. By integrating these solutions today, you can position yourself as the trusted guide that clients are looking for in a time when certainty is in short supply.