L&C Retirement Income Planners
4801 Lang St. NE
Albuquerque, New Mexico 87109
It never ceases to amaze me what lengths Wall Street will go to with their products to make them pretend to be an annuity. Remember, all brokers want to do is make changes in your portfolio, for if they can, the more chances, the more opportunities for compensation.
It walks like a duck, looks like a duck, and quacks like a duck, hmmmmm let’s call it a “bond tent.” A “Bond Tent” is a made-up name for marketing bonds; it is a portfolio of mostly short-term in a portfolio.
The concept is this: invest in more bonds for a short period is a strategy to lower the chance of return risk. Called the “bond tent” strategy, this approach allows pre-retirees to increase their asset allocation in bonds and other more conservative investments in the 10 years before retirement, adding that retirees who use this strategy must spend down these bonds in the first half of their golden years and return to their desired asset allocation. In other words, liquidate short-term bond holding to make the retirement funds available.
Wall Street Marketing quote from the Journal: “By relying more on bonds in early retirement, the portfolio’s dependency on short-term (and unreliable) stock returns is reduced.” The downside, however, is that while an extended period of owning low-return bonds may eliminate the near-term risk, in exchange for the near-certainty of a long-term retirement disaster, as even modest inflation over the span of multiple decades can cut the purchasing power of bond income in half. http://blogs.wsj.com/experts/2016/11/27/why-a-bond-tent-can-protect-a-portfolio-in-retirement/
Here is a question, what is their desired strategy? Why not use an SPIA or the free withdrawal from an annuity and forget about bond valuation dropping as it was spent down? Better yet, how about a Fixed Indexed Annuity (FIA) with an income rider attached? Oh yeah, I forgot, how is the broker going to earn continual commissions?
This is Wall Street at its most creative; eventually, they will submit and provide their client’s annuities, that is, once they can figure out how to get paid every year. It is a “duck.”
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