Get to the Point-to-Point – ThinkAdvisor

That’s it: Never any losses, and only account increases when the index rises.

With a point-to-point product, your clients will either get a portion of the gains at the end of every reporting period, or they will stay exactly where they were previously. These reporting periods happen every year (or two), and you can help your clients change their strategy at the end of each reporting period.

This is why so many retirees or soon-to-be retirees are choosing these point-to-point annuities. They can still have some exposure to account growth but eliminate all the stress of market volatility associated with at-risk accounts.

One last “point” to make here.

The hidden beauty of these products is what can happen after a significant market downturn. For example, let’s say we have another 2008-2009 on our hands, and some indexes lose half of their value. If your clients were in one of those hard-hit indexes, they wouldn’t make any gains that year, but they also wouldn’t be exposed to market-risk losses.

But here’s the beauty of a point-to-point strategy: The reporting period would just re-set in the bad, 2009-like year and would look forward another year. While others were stressed about their market losses, your clients would have had no market-risk exposure in the 2009-like year and could hope to see gains in the following, recovery year.

It’s that simple.

Consider using these point-to-point strategies can help reduce market risk exposure. Both you and your clients will enjoy this level of planning, point to point.

Tim Wood is the owner of The Plan Advisor, a retirement planning firm in Johnson City, Tennessee.