The Value of Adding Annuities to a Portfolio with Mark Paulson

Annuities have long been acknowledged as valuable financial instruments that provide the opportunity to effectively manage risks, making them a cornerstone in a well-rounded retirement strategy. By incorporating annuities into a portfolio, individuals can help mitigate their exposure, thereby enhancing their financial security.

In this episode, Jack talks with Mark Paulson, VP of Global Hedging Business Development at  Allianz Investment Management U.S. LLC. In his role, Mark leads the development of global fixed index annuities, registered index-linked annuities, and fixed indexed universal life insurance businesses from a hedging perspective. He leads the interaction with global clients, translates client business goals into projects for the various Allianz Investment Management (AIM) hedging functions (strategy, systems, portfolio management, and trading), and oversees AIM hedging's involvement in global business development.

Mark talks with Jack about dynamic hedging strategies and the value of adding annuities to a portfolio. He discusses the concept of the efficient income frontier and how adding an annuity can shift this frontier, allowing for more efficient income generation in retirement. Mark emphasizes the importance of risk management and the need to shift the mindset from accumulation to decumulation when planning for retirement.

Key Takeaways

• [01:03] - Mark's role at Allianz Investment Management U.S. LLC. 
• [05:46] - How Mark became knowledgeable in all things hedging.
• [07:02] - Mark's role as an educator.
• [10:42] - What the portfolio impact report is and how it works.
• [13:41] - Changing the definition of risk and reward in retirement planning.
• [18:09] - Mark's three key takeaways.
• [19:28] - Mark's interests outside of work.

Quotes

[08:40] - "People who are familiar with annuities already understand the value of adding them to a client's portfolio." ~ Mark Paulson

[17:36] - "As we see this generational shift from baby boomers hitting their peak retirement years, the mindset needs to shift from accumulation to decumulation. And making some small tweaks to the efficient income frontier framework can change the mindset as to how we're looking at retirement." ~ Mark Paulson

[18:34] - "An annuity can really help manage a lot of risks. It can help reduce your exposure to longevity risk, reduce your exposure to inflation risk, and reduce your exposure to market returns and market shocks." ~ Mark Paulson

Disclosures

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.542.5427. www.allianzlife.com. In New York, products are issued by Allianz Life Insurance Company of New York, 1633 Broadway, 42nd Floor, New York, NY 10019-7585. www.allianzlife.com/new-york Variable products are distributed by their affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Only Allianz Life Insurance Company of New York is authorized to offer annuities and life insurance in the state of New York.

Allianz Investment Management U.S. LLC is a subsidiary of Allianz Life Insurance Company of North America and provides investment management and hedging services for the broader Allianz Group.

Allianz Life Insurance Company of North America is an investor in LifeYield, LLC.

For investment professional use only.

Links 

• Mark Paulson on LinkedIn
• Allianz SE
• Allianz Life Insurance Company of North America
• Allianz Global Life
• Allianz Retire+
• Harry Markowitz
• William Sharpe

Connect with our hosts

• LifeYield
• Jack Sharry on LinkedIn
• Jack Sharry on Twitter

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