Annuities for Rising Rate Environment



At long last, interest rates are on the rise.

On March 16, the U.S. Federal Reserve announced that it was raising the target range for the Federal Funds Rate by a quarter-point. This move is the first in what some bond traders believe could be a long series of hikes persisting into 2023, and which might see interest rates climbing above 2.50% by the middle of next year.


Annuity Interest Set to Grow

What does this mean for retirement investors? Well, it’s great news for those in the market for annuities and other fixed-income investments. Naturally, higher interest rates mean a bigger income stream for these products. Moreover, you might not have to wait until 2023 to take advantage of elevated interest rates. The market has moved ahead of the Fed. The U.S. 10-year Treasury rate jumped to its loftiest level since the second quarter of 2019. Short-term rates, as measured by the U.S. 2-year Treasury rate, have also jumped to multi-year highs.


The Appeal of Fixed Annuities Amid Rising Interest Rates

Fixed annuities also stand to benefit from the new interest rate environment. A fixed annuity is an insurance contract that pays a buyer a defined and guaranteed interest rate on contributions the buyer makes. A major advantage for investors is that earnings for a fixed annuity are tax-deferred until the individual receives income from the annuity, or when they surrender the annuity. Someone nearing retirement may wish to purchase a fixed annuity today and receive an income stream years down the line. Higher market rates yield better annuity payouts.

Another annuity type—fixed-indexed annuities (FIAs)—are linked to a stock market index like the S&P 500. Owners of the contracts enjoy gains when the stock market rallies, and are protected by a floor from significant losses should stocks decline sharply.

You might wonder how FIAs can offer better yields now versus the past few years. This is determined by an insurance company’s general account and the cap rate it can offer. When interest rates climb, the annuity company’s general account grows, too, so those benefits are passed along to the investing public; and that goes for many types of annuities, not just FIAs.


RIAs Can Have an Edge

Advisors could pounce on this chance to offer attractive-yielding annuities to the right client segments. Breakaway RIAs are particularly well-positioned in that they have the flexibility to pivot as market conditions change. Advisors can partner with Halo to access a competitive annuities marketplace with efficiency and ease. Those employed by large broker-dealers can be handcuffed by restrictive policies and red tape, so they can be caught flat-footed in this ever-changing market landscape; that can create opportunities for more nimble wealth managers.


The Value of Halo Investing’s Technology Solutions

Halo is not simply an annuities platform, though. We are advisors’ go-to for all things tech. Breakaway RIAs across the world work with Halo to refine their tech stack. Along with a dynamic investing environment, technology changes as well. As a business owner and financial advisor, you’re likely juggling many competing priorities. We find that advisors are experts in client relationships and managing financial plans. Halo is here to allow RIAs to offload time-consuming back-end processes so they can focus on building and cultivating client relationships.


Other Product Offerings

Variable annuities might become more appealing, too. Variable annuities are often riskier than fixed annuities since their performance ties more closely to returns in the stock market. Investors and advisors worried about where equities are headed might prefer the relative safety of fixed annuities. RIAs can still, of course, offer variable annuities to more aggressive clients. Advisors can use both fixed and variable annuities, along with riders, to tailor insurance products for their clients. What’s more, RIAs can use Halo as their Outsourced Insurance Desk (OID) for fee-based annuities.


Working with Halo

Halo’s marketplace features competitive prices and transparency for advisors. The annuity landscape is challenging enough given how complex many of the products can be, and comparing apples to apples is no small task. By partnering with Halo, RIAs can analyze and transact annuities quickly and know what they are paying. Additionally, advisors can work with Halo’s subject-matter experts to ensure they know what they are buying and understand how the products fit into client portfolios. Halo handles settlement and processes operational tasks so RIAs can focus on their clients.

Advisors might consider implementing annuities in this rising interest rate environment. With bond prices falling and the traditional 60/40 portfolio enduring one of its worst starts to a year on record, better options are needed. Some analysts recently noted that the next 10 years could be a lost decade for a traditional 60/40 portfolio due to structurally high inflation and low economic growth. Meanwhile, rising rates should be a boon to annuity interest among investors. Annuities can give retirees a higher income stream without the risk of bond holdings falling in value should interest rates creep up.


Annuities Address Common Client Risks

Annuities also feature the security of lifetime income potential. Longevity risk is a major concern among the 60 and older crowd. Halo works with advisors to help them compare life annuity choices. Another potential stumbling block for retirees is the sequence of returns risk—equity market losses (and even fixed-income losses due to rising rates) early in one’s retirement can have a significantly adverse effect on the long-term solvency of a financial plan. Annuities can help buffer against that risk. Riders are often added to address long-term care concerns and allow for death benefits, as well.

Another annuity upshot: Older retirees can take advantage of mortality credits. Individuals and couples in their 70s, for example, can own an annuity with an interest rate that is materially higher than market yields due to mortality pooling. The longer the annuity holder lives, the higher the effective interest rate will end up being thanks to mortality credits.



Halo Investing’s competitive marketplace helps breakaway advisors compare annuity providers and insurance products. We are a tech stack solution for the rapidly evolving advisory industry. Our team is on-call to assist RIAs with questions and to make accessing protective investments seamless. Finally, as an OID, Halo handles back-end processes and operational tasks to free up advisors’ valuable time.


About Halo

Halo Investing is an award-winning technology platform for protective investment solutions. Headquartered in Chicago, with offices in Abu Dhabi, Zurich, Dubai, and Singapore, Halo was co-founded by Biju Kulathakal and Jason Barsema in 2015 with a mission that focuses on putting “impact before profits,” providing access to impactful investment opportunities previously unavailable to most investors. Through the Halo platform, financial advisors and investors can easily access structured notes, market-linked CDs, buffered ETFs, and annuities, as well as a suite of tools to educate, analyze, customize, execute, and manage the most suitable protective investment product for their portfolios. Halo has received a growing number of honors and was recently named one of Fast Company’s Ten Most Innovative Companies of 2021. For more information, please visit:

Halo Investing is not a broker/dealer. Securities offered through Halo Securities LLC, a SEC registered broker/dealer and member of FINRA/SIPC. Halo Securities LLC is affiliated with Halo Investing Insurance Services and Halo Investing. Halo Securities LLC acts solely as distributor/selling agent and is not the issuer or guarantor of any structured note products.