Looking back, there is one word to describe 2019: uncertain. Markets hit new highs and lows, political tensions continued rising at home and abroad, and concerns about a potential downturn in the market and the economy were top of mind. And as the first month of 2020 comes to an end, these challenges show no sign of slowing.

Our fifth annual Advisor Authority study of roughly 1,600 RIAs, fee-based advisors and individual investors revealed that 66% of investors feared market volatility would increase in 2019. Investors also said that protecting assets was among their top three concerns—and that protecting against market risk is one of the top three benefits of working with an advisor when markets are volatile.

We can expect similar sentiment in the year ahead. To help your clients prepare for the uncertain and the unknown, another word comes to mind: protection.

Protect Clients’ Assets During Times Of Uncertainty
As the equities market ended 2019 on a record high, and the longest running bull market enters its eleventh year, more than half of investors were concerned about a bear market. Investors want to protect their gains from the market’s persistent volatility and potential downturn. In fact, the number of investors with a strategy in place to protect their assets from market risk increased a full eight percentage points, to 65% in 2019 from 57% in 2018.

Advisors clearly understand investors’ concerns—the vast majority of RIAs and fee-based advisors (88%) had a strategy in place to protect their clients’ assets against market risk. While diversification was the number-one solution used by both advisors and investors, advisors focused on a much broader range of solutions. To help clients protect against downside risk while capturing upside potential, advisors said that other top solutions include fixed annuities (53%), fixed index annuities (48%) and liquid alternatives (44%).

Protect Against The Retirement Income Challenge
We all know 10,000 baby boomers a day reach retirement age—and in 10 years, the youngest boomers will turn 65. The retirement income challenge will continue to become more severe, as our aging population lives longer and spends decades living in retirement. The profound impact becomes clear when year over year Advisor Authority has shown that even millennial investors, ages 18–35, say saving enough for retirement is consistently among their top three financial concerns.

One of the greatest sources of uncertainty among investors is generating reliable retirement income. In fact, even among ultra high-net-worth investors, nearly two-thirds (62%) said the concern that they will need another source of guaranteed income to supplement Social Security keeps them up at night. Their fear is real. Although 70% of investors had a strategy in place to protect against outliving their savings, the majority cited Social Security as their number-one solution. As concerns rise about the solvency of Social Security, and the retirement safety net comes under real threat, investors need other solutions.

The vast majority of RIAs and fee-based advisors (87%) had a strategy in place to protect their clients against outliving their savings. They consistently incorporate Social Security as a source of guaranteed retirement income, but they also leverage a much wider range of solutions. More than half (53%) use variable annuities with living benefit riders. Year over year, they are also more likely to incorporate fixed-income ladders/bond ladders, dividend-yielding stocks, yield- generating ETFs and a range of income generating annuities including longevity insurance/deferred income annuities (DIAs), single premium immediate annuities (SPIAs) and qualified longevity annuity contracts (QLACs).

Take Action Now To Protect Clients In The Year—And The Decade—Ahead
Investors and advisors recalibrated their financial outlook last year, and their optimism wavered in the face of the uncertain and the unknown. As this new year moves ahead, clients will continue looking to you as their “financial therapist” who can help them stay focused on long-term goals, make more informed decisions and remain calm to avoid emotional reactions in the face of rising uncertainty. Protection should be a centerpiece as you develop their holistic financial plans—to protect their assets, their retirement and their financial futures—no matter what this new year and new decade brings.

Craig Hawley is head of Nationwide’s annuity distribution.