With many clients nearing or at retirement, income allocation isn't about chasing yield -- it's about making sure the bills get paid.

That's one of the main takeaways from Nasdaq's latest Income Allocation Survey -- and it marks a subtle but important shift in how advisors are approaching income strategies.

Yes, income remains a core part of the portfolio (holding steady at 29% of overall allocation). But the purpose of that income is evolving. Fewer advisors are optimizing strictly for total return. Instead, a growing share -- now 32% -- is focused on paycheck replacement. That's not just semantics. It's a signal.

Retirement is no longer a future dream for many clients. It's here, or right around the corner. And that means the conversation and questions about income need to be addressed.

For example, will clients be able to cover their mortgage and healthcare costs, and will travel or helping family members be part of the budget?

In short: Clients don't want an income strategy. They want income they can count on.

What Advisors Are Doing Differently

Interestingly, while the overall allocation hasn't changed much, the tools advisors are using to build income have.

The survey found that usage of cash and cash alternatives rose 12%, passive ETFs increased 11%, and active mutual funds climbed 9% compared to two years ago. That mix suggests advisors are prioritizing liquidity, flexibility, and a blend of both passive and active management, depending on client needs. The one-size-fits-all approach is officially out.

At the same time, the risks clients are worried about the most over the next 12 months is inflation (44%), market volatility (34%), and interest rate changes (33%).

And yet, most portfolios aren't being radically reshaped as time goes on. Tools like options-based strategies, which could address some of these risks, remain underutilized -- often because they're more complex to explain and harder for clients to understand and feel confident about.

That's where advisors have room to lead.

The Takeaway

Clients, especially Gen X and Boomers, are shifting from "How much can I grow?" to "How do I live off what I've built?" And that changes everything.

The advisor value isn't just in choosing the right mix of ETFs or funds; it's connecting the dots between a portfolio and a predictable lifestyle.

At the end of the day, income planning isn't just math. It's a mindset. As tools evolve and client needs become more complex, your ability to explain, personalize, and guide is what truly sets you apart.

And for those in or nearing retirement, the most valuable thing you can offer isn't a product -- it's peace of mind.

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