Financial Advisors' Evolving Perspectives on Annuities: 2020 vs. 2025

Advisors' annuity recommendations have evolved notably due to changes in market conditions, regulatory environments, and client needs.

Sentiment in 2020: Cautious Adoption Amid Complexity

In 2020, financial advisors exhibited a cautious approach toward annuities. A significant portion—approximately 32%—did not recommend annuities to clients, even when clients inquired about them. The primary concerns included:

• Complexity: Annuities were often viewed as intricate products that were challenging to explain and understand.

• Liquidity Constraints: Advisors were wary of the limited access to funds and potential surrender charges associated with annuities.

• Perceived Value: There was skepticism about whether the benefits of annuities justified their costs and restrictions.

Despite these concerns, some advisors recognized the role of annuities in providing guaranteed income, particularly for clients without pensions or other steady income sources. However, the overall sentiment leaned toward caution, with many advisors preferring alternative investment strategies.

Sentiment in 2025: Growing Acceptance and Strategic Integration

By 2025, the sentiment among financial advisors had shifted toward a more favorable view of annuities, driven by several factors:

• Market Volatility and Economic Uncertainty: The desire for stable, guaranteed income streams has increased, making annuities more attractive.

• Regulatory Changes: Legislation such as the SECURE Act 2.0 has facilitated the inclusion of annuities in retirement plans, enhancing their accessibility and appeal.

• Product Innovation: The development of new annuity products, such as Registered Index-Linked Annuities (RILAs) and Fixed Indexed Annuities (FIAs), offers a balance between growth potential and downside protection.

Surveys indicate that a significant number of advisors are incorporating annuities into client portfolios. For instance, a 2024 survey by Global Atlantic found that nearly half (47%) of investors had discussed annuities with their financial professionals in the past year, with 30% purchasing a new annuity and almost 22% allocating more to an existing one. 

Additionally, LIMRA reported that total annuity sales reached a record $432.4 billion in 2024, marking the third consecutive year of record-high sales. 

Comparative Overview

Aspect	2020 Sentiment	2025 Sentiment
Advisor Recommendation	Cautious; many refrained from recommending	Increasingly favorable; strategic inclusion
Client Demand	Moderate interest	High demand due to market conditions
Product Perception	Complex and inflexible	Innovative with balanced features
Regulatory Environment	Restrictive	Supportive of annuity integration
Sales Trends	Stable	Record-breaking growth

In summary, the perception of annuities among financial advisors has transitioned from skepticism to strategic endorsement between 2020 and 2025. This shift is attributed to evolving market dynamics, regulatory reforms, and product innovations that align annuities more closely with clients' retirement planning needs.

Sources for this post include, but are not limited to, LIMRA, Kiplinger, Global Atlantic and ChatGPT