RILAs bring stability, growth during volatile markets

This article was produced in partnership with Brighthouse Financial.

Not all great artists are recognized or appreciated in their time. Van Gogh, Monet, and Cezanne are just a few masters who failed to crack the market until later in life. Or in the case of other artists, well after their time had passed.

The same can be said for registered index-linked annuities (RILAs), which have been in the market for over 10 years yet have only recently been heralded by advisors and investors alike. While they are certainly not as colorful as impressionist paintings, their recent climb trends similarly to wide popularity and adoption.

As Myles Lambert, executive vice president and chief distribution and marketing officer at Brighthouse Financial, tells InvestmentNews in an exclusive interview, RILAs have indeed been making a massive, ahem, impression of late, especially as more investors seek the stability of guaranteed lifetime income streams in an increasingly volatile market.

Gregg Greenberg: RILAs have been in the market for over 10 years, gaining popularity over time. What do you think has helped make them popular?

Myles Lambert: As more people are seeking ways to prepare for retirement, many of them are asking the same question: how can I not only protect but also grow my retirement savings? RILAs are thoughtfully designed to help achieve both objectives, striking a balance between potential growth opportunities and a measure of downside protection. That is a powerful concept that may be attractive to many clients, especially those who are nearing retirement.

The widespread appeal of this product category stems from its innovative design and compelling value proposition. RILAs can provide the opportunity for participation in market growth, up to a certain percentage, by tracking the performance of one or more market indices. In addition, RILAs provide some protection against market volatility to help clients manage that particular risk. These integrated design features work together to deliver positive outcomes, supporting clients in their pursuit of individual retirement goals.

The ability of RILAs to address different market scenarios has also helped these products resonate with some clients. For instance, many clients like knowing that, with an RILA, they have a level of protection in the event markets go down. In turn, that confidence may help clients remain invested during market volatility, which can be important for reaching their long-term financial goals.

Greenberg: What are some ways in which RILAs have evolved?

Lambert: At their foundation, RILAs remain the same products they were when they were introduced more than a decade ago. However, there is genuine consumer demand for these products, which has not only fueled growth in RILA sales but also spurred their ongoing evolution. Over the years, our industry has continued to find new and enhanced ways to enable RILAs to further meet the changing needs of consumers. The introduction of new indices, levels of downside protection, and crediting strategies – some of which allow for growth even when equity markets decline – are among the ways in which our industry has responded to these needs. For example, with respect to crediting strategies, some RILAs offer participation rates that may allow clients to capture more than 100 percent of the tracked index’s growth. Through these enhancements, consumers have been given additional choices when it comes to tailoring RILAs to their individual needs.

Recently, some RILAs have started offering clients the option to receive a reliable stream of guaranteed lifetime income. This benefit is in response to interest among many investors in additional sources of lifetime income that can help them mitigate the risk of outliving their assets. RILAs that provide this source of income, which lasts for life regardless of how the markets perform, do so through an optional income rider. Income riders require the client to stay within the parameters of the rider and typically come with an additional charge. In addition to providing a source of income, RILAs with an income rider also offer clients growth opportunities by tracking equity markets, which can assist them in reaching their retirement goals.

Greenberg: Markets can be unpredictable, especially in 2025. How can RILAs help clients remain invested during times of volatility?

Lambert: Understandably, many investors may be tempted to pull out of the markets during periods of downturn. However, doing so can lead to missing out on positive market days, which can have an impact on their portfolio’s long-term performance. By guarding against some or all losses during periods when markets are down, RILAs can play a role in helping investors stay invested in the markets should they turn volatile.

Some investors may seek guidance from their financial professional during periods of market uncertainty. Financial professionals can emphasize to clients who own RILAs that these products are specifically designed to help safeguard a portion of their portfolio in such challenging conditions. This can lead to positive conversations at times when they may be most impactful, helping clients to remain invested and avoid behaviors that could cost them the opportunity to benefit from the long-term-growth potential of the markets.

This year’s market fluctuations highlight the value of RILAs. As demonstrated by the recent volatility, having a strategy that provides growth opportunities coupled with a level of downside protection can help clients to invest confidently and stay the course. This underscores the benefits RILAs can offer to a portfolio, making these products appealing to clients.

Greenberg: Are there opportunities to create greater awareness of this product category since it is still relatively new?

Lambert: As a relatively new product category, RILAs present significant opportunities to enhance awareness and understanding of the role they can play in helping clients work toward their retirement goals. That said, carriers, financial professionals, and industry groups have done an outstanding job of building awareness of RILAs in the relatively short amount of time this product category has been available. The rapid growth RILAs have experienced is in large part a reflection of the success of those efforts. For example, according to LIMRA, 2024 marked the 11th year in a row that RILA sales hit a new high and the first year in which RILA sales surpassed traditional variable annuity sales.

At Brighthouse Financial, we actively promote greater awareness and understanding of RILAs, along with our other offerings, through a variety of initiatives tailored toward both consumers and financial professionals. This includes leveraging advertising, social media, white papers, and other forms of communication, as well as engagement opportunities with the media. In addition, our website provides consumers and financial professionals with access to a robust set of tools and resources to enhance their knowledge of our products, including thought leadership articles and videos on various RILA-related topics. One of the standout features of our tools and resources is their ability to help empower consumers who prefer to conduct their own research, effectively addressing their needs and preferences. All these efforts reflect our company’s belief that promoting financial literacy and education is fundamental to delivering on our mission to help people achieve financial security.

I believe there are still meaningful opportunities for our industry to tackle common misconceptions about annuities, fostering greater clarity and trust among consumers. Over the years, many consumers have come to better understand and appreciate how annuities can help them reach their retirement goals, which reflects the progress that our industry has made in this area. However, there’s more work to do, and our industry remains focused on ensuring consumers and financial professionals have the right information and tools, so they can make informed decisions about these products and their financial futures.

Greenberg: In light of the ever-evolving retirement landscape, there is much talk today about the importance of guaranteed lifetime income. How have insurance products evolved to support Americans’ need for guaranteed income?

Lambert: Our industry has continued to respond to the growing demand from consumers for products that can provide them with a source of guaranteed income in retirement. Underscoring the degree to which retirement income is top of mind for consumers, a survey conducted in 2023 by the Insured Retirement Institute found that financial professionals selected “secure income” more often than both “asset protection” and “asset growth” when asked to pick the top financial goal expressed by their clients.

When RILAs were introduced, their initial core value proposition was a balance of growth potential and a level of downside protection. Today, some RILAs offer additional value in the form of an optional lifetime income rider that is designed to help clients supplement their retirement income with an income stream they cannot outlive.

Access to guaranteed lifetime income is also now being offered through some employers’ defined contribution plans. Broadly speaking, these strategies, through combining annuities and target-date strategies, provide plan participants with the option to receive a guaranteed stream of income for life. It is exciting to see annuities being leveraged in a variety of innovative ways to help workers plan for the retirement they envision and deserve.