When the industry's largest firms move in the same direction, advisors should pay attention. That's exactly what's happening with retirement income solutions.

Recent announcements* from Fidelity, Vanguard, and BlackRock signal a growing commitment to embedding annuities directly into 401(k) plans. The objective is straightforward: help retirees convert accumulated savings into a predictable stream of income that seeks to last throughout retirement.

For many investors, that's an attractive proposition. But while predictable income addresses longevity risk, it doesn't necessarily address every retirement planning challenge. In fact, as more retirement assets are allocated toward income guarantees, advisors may need to think even more carefully about where clients will seek growth, flexibility, and legacy potential.

Retirement Planning Is Becoming a Two-Bucket Conversation

Traditionally, retirement planning revolved around building the largest possible nest egg. Increasingly, the conversation is shifting toward the construction of two distinct retirement buckets:

Bucket #1: Predictable Income

• Social Security
• Pensions (where available)
• Embedded 401(k) or annuity solutions (where available)
• Other lifetime income products

Bucket #2: Flexible Growth Capital

• Assets that remain liquid
• Capital that can potentially outpace inflation
• Investments available for unexpected expenses
• Assets that can be passed to heirs

The industry's embrace of workplace annuities may strengthen the first bucket. The question advisors must answer is what belongs in the second.

The Inflation Challenge Remains

One concern raised by analysts reviewing these new retirement income solutions is that fixed income streams may lose purchasing power over time. Even when retirees feel comfortable with their baseline income needs, they are still exposed to rising healthcare costs, lifestyle inflation, and unexpected spending demands over multi-decade retirements. That's why many advisors continue to seek portfolio solutions designed to participate in equity market appreciation while managing downside risk.

The growing adoption of in-plan annuities creates an interesting shift in portfolio construction. As retirement plans increasingly solve for income, advisors may need to focus more attention on solving for growth.

The question becomes:

Once retirement income is addressed, where will clients turn for growth, flexibility, and inflation mitigation?

Building Around Income Rather Than Replacing It

The rise of embedded annuities suggests that retirement planning is evolving from an accumulation conversation into an income conversation. That's a positive development. Predictable income can help reduce client anxiety and create greater confidence in retirement. However, income certainty alone is not a complete retirement strategy.

Many retirees will continue to need:

• Assets that can pursue long-term growth
• Investments that remain accessible and liquid
• Capital available for future spending needs
• Resources that can support legacy and estate-planning objectives

In other words, as advisors seek to help clients with their retirement income, they may simultaneously need to maintain a portfolio growth engine elsewhere.

This is especially relevant because many of the new annuity-based retirement income solutions are confined to employer-sponsored retirement plans. The assets clients hold outside those plans may become increasingly important in supporting broader retirement objectives.

The Advisor Opportunity

The emergence of embedded annuity solutions expands the advisor's role. Clients may need guidance on critical questions:

• How much of a portfolio should be allocated to guaranteed income?
• How should inflation risk be addressed?
• Which assets should remain liquid?
• How should retirement assets be coordinated across multiple accounts?
• What role should growth-oriented investments continue to play?

As retirement income solutions become more common, advisors have an opportunity to add value through holistic portfolio design rather than simply product selection. The future may not be annuities versus investments. It may be annuities plus investments, with each serving a distinct purpose within a comprehensive retirement strategy.

A Potential Complement Outside the Plan

For advisors navigating this evolving landscape, solutions outside the retirement plan may play an increasingly important role.

One example is PVEX, an actively managed equity strategy designed to provide exposure to long-term market growth while incorporating an options-based approach as part of the portfolio's construction. Because strategies such as PVEX generally may not be available within employer-sponsored retirement plans, they can be considered in taxable accounts, IRAs, trusts, and other assets that sit outside the 401(k).

Viewed through that lens, an annuity and PVEX are not competing solutions. They may serve complementary purposes.

• An annuity can help establish a retirement income floor.
• PVEX seeks to help maintain exposure to long-term market growth.
• An annuity may strive to prioritize predictability.
• PVEX seeks to provide portfolio flexibility.
• Together, they may help address different dimensions of retirement risk.

As firms continue bringing retirement income solutions into workplace plans, advisors may increasingly find themselves having a different conversation with clients. Not whether they need income. But what belongs alongside it.

For many investors, the answer may involve pairing guaranteed income with a carefully selected growth strategy outside the plan. As retirement evolves, balancing those two objectives could become one of the defining challenges and opportunities for advisors in the years ahead.

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*source: https://www.thedailyupside.com/advisor/industry-news/fidelity-joins-blackrock-vanguard-in-offering-annuities-in-401k-plans

PVEX does not provide guaranteed income. Any distributions the fund pays are not guaranteed, may vary or stop, and may include return of capital. You could lose money by investing in the fund. Annuity income guarantees are backed solely by the claims-paying ability of the issuing insurance company.

An annuity's income guarantee depends on the insurer's claims-paying ability. PVEX carries no guarantee and can lose principal. Costs and liquidity differ. Tax treatment differs, which matters especially since the post points readers to taxable accounts, IRAs, and trusts.