Why advisor annuity adoption often stalls on workflow and fee objections

Annuity products have become simpler, more transparent on fees and easier to buy through advisory platforms, yet annuity adoption among financial advisors still trails what clients say they want. Executives and researchers argue the main obstacles now sit inside advisor practices rather than in the contracts themselves.

The timing is pressing. The Alliance for Lifetime Income estimates that more than 4.1 million Americans will turn 65 each year through 2027, or roughly 11,200 a day. LIMRA research released in August 2026 found that about seven in 10 pre-retirees prefer retirement income with a protected component such as Social Security, a pension or an annuity, rather than relying only on portfolio withdrawals. 

LIMRA also identified perceived cost and reluctance to give up control of assets as the biggest psychological barriers to buying an annuity. Those are the same two objections advisors hear across the desk.

How advisors can answer the lockup and fee objections

Michael Kazanjian, head of insurance overlays at FIDx, a Berwyn, Pennsylvania-based annuity technology firm, treats both complaints as one exchange. A client hands an insurer only the slice of savings meant to produce steady income, gives up easy access to that money and receives a promise of payments for life in return. He applies the same reasoning to cost.

"A senior leader I used to work with put it simply: fees are only an issue in the absence of value. Every product has a cost; what differs is the value. Here, the value is the ability to spend in retirement without underspending out of fear of outliving the money," Kazanjian said.

He argues the benefit reaches beyond the annuity itself. "Once one account is doing the income job, the advisor has more flexibility with everything else. It's not only a restriction on one sleeve. It frees up mobility everywhere else," he said.

What does an annuity do for the rest of the portfolio?

Michael Finke, professor of wealth management at The American College of Financial Services, steers clients worried about tying up savings toward annuities with a living benefit. That is a feature that guarantees a minimum withdrawal amount for life while leaving the contract value accessible after purchase. Finke said current payout rates compare well with building income from bonds to an average life expectancy, which he puts at about 87 for a male financial planning client and 89 for a female client.

"The benefit of the annuity over bonds is that the client can spend as if they are going to live to an average longevity rather than spreading savings out to avoid running out of money at age 95 or 100. You can spend more and worry less about running out in old age," Finke said.

He compares the income benefit fee to a car insurance premium. Part of it comes back to the retiree as a claim, which in this case is the income that keeps arriving after the contract value has run dry. "In other words, you're paying an insurance premium to protect against the risk of living a long life. The cost of insurance from our estimates is fair, and the benefit is significant since it protects against longevity risk," he said.

Finke favors a goal-based approach that starts by funding essential expenses. Under that framework, an annuity covers the same baseline bills with a smaller share of savings than an investment-only strategy that leaves longevity risk unhedged. "If a retiree has a 40/60 portfolio, they can allocate half of their bond portfolio to funding their expense goal with an annuity and withdraw less from their remaining investment portfolio," he said.

Why annuity workflow, not education, is the bottleneck

Kazanjian does not believe advisors lack learning material. Carrier wholesalers supply strong content, much of it from third parties, while The American College and the Insured Retirement Institute publish extensive research. He considers asset managers the most useful partners because they judge an annuity purely on what it does to a portfolio.

The bigger drag, he said, is operational. "We hear all the time about advisors touching five to seven different platforms just to research an annuity, transact it, and manage it, and then the contract sits outside the portfolio anyway," Kazanjian said. "It may never be quite as simple as an ETF, but it shouldn't be magnitudes more complicated either. Research, proposal, transaction, and management should all happen under one roof, and that roof should cover the house the advisor already lives in."

His view tracks with J.D. Power's 2026 study of life and annuity distribution. In that study, advisors flagged usability problems with carrier digital portals, and 20% of annuity-focused respondents said their providers need to strengthen self-service capabilities. 

The one-and-done annuity problem

Many advisors place a single contract and judge the whole category by it. Kazanjian said the sheer range of products is both the strength and the weakness of the market. The range spans multi-year guaranteed annuities that lock in a fixed rate for a set term, immediate annuities, deferred contracts built for growth or protection, and traditional guaranteed income products.

"So, if an advisor says annuities aren't for their clients, I'd push back and ask which type they mean. If the answer is 'we don't need guaranteed income,' that may well be true, but it says nothing about the other categories," he said. "A broad brush gets used to paint the whole space when the advisor has only been exposed to one or two solutions."

The decision, he said, comes down to each household. "There is no one size fits all, and no two clients are the same," Kazanjian said.

Finally, Brett Diamond, wealth manager & managing director at Park Cities Group at Steward Partners, says his goal is not to begin with an annuity and determine how to fit it into a client's portfolio. He begins with the financial plan, identifies the client's goals and needs, and then determines whether an annuity has an appropriate role within the overall strategy.

"By presenting both sides of the discussion clearly and transparently, we can work with the client to arrive at a solution that is consistent with their financial plan, risk tolerance, income needs, and long-term goal of financial independence," Diamond said.