In a new study by Spectrem Group, Financial Advisors Address the Retirement Income Crisis, 75% of advisors say they provide a written plan for their clients' retirement planning—and for almost two-thirds of these advisors, this plan includes a budget for the expense equation. Spectrem Group surveyed more than 100 advisors in April 2008 to create the study, which was sponsored by Ameritas Advisor Services, an annuity company in Lincoln, Neb.

Only half of advisors employ specific investments such as bond ladders, target-date mutual funds, individual bonds, high-dividend-yielding stocks, CDs, preferred stocks or royalty trusts.

Despite a troubled market and an effort by the annuity industry, only 59% of advisors use annuities in their clients' plans. In fact, 80% of advisors worry about locking their clients into a long-term retirement income product such as an annuity, the study reports. Half of advisors recommend annuities less than half the time; 32% don't recommend them at all.

According to Mitch Politzer, senior vice president of Ameritas Advisor Services, this is due to misconceptions planners have about these products. "When advisors' education took place, annuity products were not particularly good: They were expensive and lacked flexibility, and you had to annuitize in order to get the benefits," he says. "Their beliefs were very well founded, but a bit dated. Also, advisors see annuities as a way of converting capital gains into simple income."

Nearly 75% use bonds and 64% use income mutual funds. More than 70% of advisors want to see more retirement products that aren't annuities.

"What advisors like are the guarantees insurance products have to offer, and if they could get them from something other than insurance then they'd like that," Politzer says. "But that's like saying you'd like to fly but don't like planes."

Of the roughly 60% of advisors who do use annuities, more than half recommend a combination of fixed and variable products. Nearly one-third offer immediate payout annuities, and 15% offer deferred. Nearly 40% offer either a principal rider or guaranteed lifetime withdrawal benefit. Fidelity annuity products are the most recommended, while Ameritas, ING and Vanguard are also popular choices.