4 Strategies for Rising Interest Rates (That You Might Have Forgotten)


Fortunately or unfortunately, depending on your point of view, we haven’t had to worry about rising interest rates for nearly a decade. Monetary policy, including quantitative easing, forced interest rates to near zero for a period of time. Clients benefited from the falling rates through capital gains growth that historically has not been a large part of bond returns.

With today’s rising interest rates, financial professionals need to offer strategies that many clients haven’t thought of for several years. Some will seem foreign to clients, as well as financial professionals, due to the time lag since they have been last deployed.

  1. We can’t chase yield. In my opinion, this has always been a staple of good, quality advice. However, we tend to chase the highest rates in any vehicle. Pressure on adhering to best interest standards makes us think that the highest interest rate is only the right thing to do. I think we should make sure there is balance with long-term stability of returns, rather than simply chasing high returns. Look to build a more consistent portfolio instead of just finding yield for a portion of the portfolio.
  1. Laddering continues to make sense. Like all good professionals, we tend to tweak what worked for us until it no longer looks like the thing that was successful. Over the past decade, we have forgotten how to take advantage of rising interest rates. We’ve changed how we position interest-driven products as rates fell quickly after the financial crisis. By laddering your interest-driven vehicles, your clients eventually have all their funds at longer term duration, which should bear a better interest rate in normal yield curve scenarios, but with liquidity staggered throughout the portfolio. We find this is a good strategy for all rate environments, but we tend to get away from it at interest rate peaks. 
  1. The purpose of the asset must be defined. Many clients tell their financial advisor they want growth with the appropriate level of risk. And, we tend to oblige them with “custom designed” portfolios from a third-party money manager. Instead, let’s change the conversation to “What do you want this money to do for you?” This question has the potential to lead to a more open discussion around long-term planning. If the assets are for retirement, let’s position them accordingly, using strategies that make sense for protecting the longevity of the portfolio. Income is the new outcome which requires more complex analysis as opposed to the highest current interest rate.
  1. Adopt to new product development made for this environment. New designs tie returns to a variable interest rate benchmark. As that benchmark interest rate increases, the client’s rate increases the following year. Many will find a three or five-year duration long; however, using laddering strategies can be beneficial in mitigating this risk.

We face a lot of challenges as the baby boomer generation continues to leave the workforce toward retirement. If not handled correctly, a rapidly rising interest rate environment makes for a potential portfolio burden that many clients are not seeing clearly. Take time to review the client’s intentions and plan for a rising rate environment over the next several years. 

Winning Strategy

Evaluate your bond holdings and plan for a rising rate environment. Your clients are unlikely to see the risks ahead due to recent monetary policy. Put your clients in a position to win.

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at

Retirement Interest Rates Winning Strategies Capital Gains

Fundamental Truths of Chasing Yield and Liquidity


I have long discussed the need to position your products and services on value propositions besides rate.  However, I want to talk about the advantages of selling in today’s low rate environment and placing the client in a better position using rate as an example. In the long run, the value you bring to your clients by talking about current fundamentals will bring more people back to your office.


As I looked at today’s rates (Sept. 6, 2016), the current 30-year Treasury Yield is 2.24 percent. Currently, several insurance carriers are offering five-year, multi-year guaranteed rate annuities with similar rates. I constantly read in the Wall Street Journal about advisors placing their clients in dividend-paying stocks in order to create better yields in the portfolio. So, in order to obtain higher yields, the client either must take equity risk in the portfolio or expose the bond portion of the portfolio to extreme price depreciation in the event of a rising interest rate market. Neither sounds fundamentally strong for the long haul.


Too many advisors fail to show an alternative because of their own biases against annuities or a bad past experience. But, I believe we are in the best-ever market conditions to sell our products. Even with fixed annuity yields between 2.25 percent and 3.34 percent (assuming an FIA hits a 4.5 percent cap 75 percent of the time), our taxable equivalent yield is, at a minimum, 3.84 percent – well above the current investment grade corporate bond yields. And, the nominal return is just as high as the current 30-year Treasury rate, with no risk to principal in an increasing interest rate environment. 


So, while your competition searches the next best thing that their clients want to hear or chase, talk to your prospects and clients about two fundamentals: safety and liquidity. Ask yourself:

  • Why wouldn’t your client want to take a 30-year yield with one-sixth of the maturity?
  • And, why wouldn’t the client want to have a more liquid portfolio for the same yield with additional flexibility for emergencies and medical issues? 
  • And, what prevents you from showing this option? Likely, it’s your mindset against a lower interest rate than six months ago.


Winning Strategy:

Don’t focus on where the economy or interest rates were six months ago and compare them to today. Look at the relative economic conditions and talk to your clients about fundamentals. They will appreciate the simple, straight-forward approach to their retirement success.


About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of annuities at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”


Yield Annuities Rates Economy Market

Fact or Fiction? You Be the Judge


We’ve heard in the past that October is the biggest CD rollover month of the year – fact or fiction?

Let’s look at some history. CDs were first sold in six-month increments (six months, 12 months, 18 months, etc.), but in October of 1983, they became deregulated.  

Tax returns were a leading factor in the October/April trend. We saw an increase of CDs being established by people receiving a refund, or they surrendered their CDs to help pay for taxes due. At one point, Bank Rate Monitor estimated that upwards of $100 billion in CDs was in transition in each of those two months.

In order to smooth out the issuing of CDs and reduce the amount in play during October and April, banks started to offer them on odd terms, such as seven or 15 months. This slowly moved the trend across the balance of the year.  

Look at today’s CD rates on*:

  • 1-year national average of .98% 
  • 2-year national average of 1.17%
  • 5-year national average of 1.86%

Are CD’s the right place for your clients? Or are you still following an outdated trend? The fact is, October is no longer one of the two hottest months for CD rollovers. It’s open season throughout the year.  

If your clients are looking for … 

  • Protection of principal
  • Security from negative market fluctuation
  • Tax deferral
  • Penalty-free access to a portion of account value each year
  • Opportunity to create guaranteed income for life

... Make sure you contact a member of the annuity team at Ash Brokerage to help you with CD alternatives – annuities are also available all year long.

*As of Oct. 10, 2014 

CD Annuities Rates