Skip to content

Advisors Weigh In: How to Increase Annuity Sales


Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS
Corporate Vice President, Annuity and Retirement Income Research

May 2024

Individual annuities have long been distributed through agencies, brokerages and independent marketing organizations, as well as national, regional and independent broker-dealers. Annuity sales reached record heights in 2022 and 2023 almost entirely due to sales through these channels. Investment advisor representatives (IARs) who work for registered investment advisor firms (RIAs) and provide financial advice to individual investors for a fee manage at least $6 trillion in assets and often work with older and wealthier clients for whom annuities could be a good fit. Yet RIA advisors — even those who are dually licensed — often sell few or no annuities.

The most obvious reason RIA advisors tend not to sell annuities has to do with the compensation systems and licensing requirements involved with the issuance of annuity products. IARs must always act under a fiduciary standard of care for their clients, and adherence to that standard typically involves avoiding conflicts of interest that can arise when commission-based products are sold. Moreover, licensed practitioners must conduct all sales. However, there are ways for IARs to recommend annuities to their clients without restructuring their practices. Fee-based annuities, which do not pay salespeople a commission, as well as outsourced insurance desks (OIDs), which enable nonlicensed advisors to sell insurance products, are increasingly available. Additionally, some advisors are dually registered representatives (DRRs), meaning they have the option of either acting as fiduciaries and charging fees for their services or as registered representatives at broker-dealers and earning commissions upon the sale of investment products. IARs and DRRs making use of fee-based products generate around 5 percent of annual variable annuity premium and 1 percent of total premium, based on LIMRA’s estimates. While these sales levels are not trivial, with IARs’ clients holding trillions in assets, it’s clear that there is considerable untapped potential among this segment of financial professionals.

Why They Don’t Sell

Recent LIMRA research sheds light on the deeper reasons for IARs’ and DRRs’ reluctance to sell annuities by asking them directly. Among surveyed advisors who had not sold any annuities in the previous two years, a lack of fee-based products was mentioned by only 1 in 8 as a reason. Instead, the most common objection was that annuity products do not align with the advisor’s (or his/her firm’s) investment philosophy (Figure 1). More than half of IARs and one third of DRRs cited this reason, which ties into the second- and third-most mentioned reasons, that annuities are perceived as “too expensive” for their clients and that an advisor can provide the same value using other investments.

Figure 1. Why Advisors Do Not Sell Annuities

Based on 222 advisors (IARs and DRRs) who have not sold annuities in the past two years. Respondents could select up to three reasons.
Source: Advisors and Retirement — Income Planning and the Role of Annuities, LIMRA.

For IARs affiliated with RIAs, their own value proposition often involves guiding their clients toward solutions that are in their best interest, with investment cost being one of the most critical selection factors. However, the attitude that annuities are very costly may not reflect the current reality; for example, the run-up in interest rates from mid-2022 through mid-2023 caused the cost per dollar of lifetime-guaranteed income to fall, making payout annuities and living benefits on deferred products more attractive.

Encouragingly, only 23 percent of advisors claimed that “nothing” would lead them to begin selling annuities. The remaining three quarters are open to that possibility — but what will convince them to do so?

What It Will Take

Our research indicates that reducing the cost of annuities is the most commonly expressed need, with over 4 in 10 advisors mentioning this factor as a reason to start selling them (Figure 2).

Figure 2. Top Five Factors That Would Lead Advisors to Start Selling Annuities

Based on 222 advisors (IARs and DRRs) who have not sold annuities in the past two years. Respondents could select up to 3 of 12 reasons, unless they selected “Nothing” (selected by 23 percent).
Source: Advisors and Retirement — Income Planning and the Role of Annuities, LIMRA.

Observing greater demand from customers would also help to convince some advisors to consider selling annuities, but this factor may overstate the importance of client demand and understate the importance of the advisor in helping to generate demand. Advisors have an obligation to help clients understand why some products may be needed. Once clients understand the value annuities provide and how they can help achieve key planning objectives, they will be more inclined to consider purchasing them.

About 3 in 10 advisors would prefer to see more fee-based and simplified product designs before reconsidering selling annuities. These reasons complement each other, as carriers sometimes position their fee-based products as low-cost, simplified versions of their commissionable products (which may have more optionality or features like guaranteed lifetime withdrawal benefits). Combined with their tax advantages, deferred annuities specifically designed for the fee-based advisor community could help to win over at least some advisors. These reasons are more commonly expressed than the desire for “more innovative products,” which tends to increase product complexity. And while there has been much focus on the difficulties of the sales process, IARs and DRRs rarely pointed to improving that process as a key factor that would lead them to sell annuities.


Based on advisors’ own statements, our research points to a few ways to move the needle. Simplified annuity products with reduced costs will be critical. Products designed for fee-based advisors, made available through OIDs and other platforms, should help attract more advisors. But more fundamental objections must be overcome before these products will be accepted. For these advisors to offer what could be seen as an expensive, packaged product for sale may seem to undercut their core missions, especially if they feel that alternative, less-costly investments can provide sufficient value. The reality is that other investments (e.g., managed payout funds) cannot provide the same level of protection as annuities, which are the only products individuals can buy that can generate lifetime-guaranteed income. When carefully explained to clients and offered in the context of a comprehensive plan to manage income, expenses and assets during retirement, annuities thus play a unique role. Widespread recognition among advisors of annuities’ value will help connect more of these products with the investor clients they serve.

Did you accomplish the goal of your visit to our site?

Yes No

© 2024, LL Global, Inc. Unauthorized use, reproduction, or reprinting of this material (or any portion thereof) for any purpose without express written permission from LL Global (LIMRA and LOMA) is strictly prohibited, including, without limitation, use with any current or future form of an Artificial Intelligence tool or engine.