RILAs gain ground amid volatility

Annuity sales remain near record highs as investors prioritize stability. RILAs, with upside potential and downside limits, surged 21% year over year in Q1 2025.  

“I think anytime you see more volatility in the market, you’re going to see an uptick in annuities,” says Mark Harper, director of case planning at Triad Partners, a Kansas-based field marketing organization. “Anytime the markets go up and down and clients are concerned, worried, an annuity is a natural landing spot where we have downside protection and can still participate in some of the upside growth.” 

Total US annuity sales reached $105 billion in Q1 2025, 1% below the record set in the first quarter of 2024, according to LIMRA. March of this year was the second-highest annuity sales month ever recorded by LIMRA, which found 2022, 2023, and 2024 to be three straight years of record-high annual annuity sales, including a 13% jump from 2023 to 2024. 

“Annuity products are priced off of the 10-year treasury, and when the 10-year treasury started to increase in 2022, it greatly enhanced annuity products versus what they were over the last 20 years, and it created a significant amount of activity,” says Chad Druvenga, CEO of CBS Brokerage, which partners with advisors and broker-dealers to provide them with access to products from insurance companies. 

Among the different types of annuities, the registered index-linked annuity (RILA) had the biggest surge of Q1, with sales up 21% year over year to $17.5 billion, according to LIMRA. RILAs offer more upside than their fixed-index annuity counterparts and are contracted to include a buffer or floor percentage to limit potential investment losses. 

“We’ve seen significant amounts with our broker-dealer partners on the RILA space,” says Druvenga, whose firm operates under the same parent company as the broker-dealer Kestra. “We’re seeing a lot of RILA activity focused more on the accumulation sales, where they have an attractive buffer available to them, and also some downside protection in a volatile market. With the volatility in the market, RILAs are very attractive.” 

Investors looking for more of a guaranteed income stream will prefer fixed-income annuities (FIAs) that offer principal protection with returns ranging from 4 percent to 8 percent annually. Fixed index annuity sales fell 7% year over year to $26.7 billion in the first quarter of 2025 but still ranked as LIMRA’s fifth-highest recorded quarter in history. “Because of how the markets worked, fixed index annuities are priced the best for guaranteed income today in many scenarios,” says Druvenga. 

“The downturn in fixed annuities is because we’ve seen this enormous growth since 2022, so it’s still really at record levels when you look at over the last 15 - 20 years,” he says. “So I think that’s a little bit misleading when you look at those lower numbers – because we were at the top and we had a little bit of a downturn. I think we’re gonna see an increase again around fixed annuities.” 

Potential misuse 

Several other types of annuities (variable, single premium immediate, deferred income), alongside their accompanying fees, commission rates, and surrender periods, make annuities a complex product that can be misused by advisors. 

The Financial Industry Regulatory Authority (FINRA) fined Florida-based AGA Capital $138,591 in May, with the regulator claiming AGA’s policies “failed to reasonably describe the steps that supervisors must take to evaluate whether the registered representatives had a reasonable basis to believe that the RILA recommendations were in the customers’ best interest.” FINRA also barred broker Christopher Reynolds last year after he forged customers’ signatures on annuities documents. 

Learning curve 

Annuities carry surrender periods that can last between three and 10 years but are usually between six and eight years. The surrender period marks the time after purchase that clients will face a penalty for taking out money from the annuity. 

“I think bringing a client up to speed if they’re not really familiar with annuity concepts, it takes a while to educate them and for them to be comfortable with moving forward with a decision to make a change,” says Nick Strain, senior wealth advisor at Halbert Hargrove. “Annuities can be simple, but they can also be complex. If you’re trying to not take a single premium annuity right away, if you’re trying to add some layers of defense or layers of guaranteed income, especially deferred income, there’s multiple options.” 

Halbert Hargrove, a California-based RIA with $3.5 billion in assets under management, partners with the fee-based DPL Financial Partners to sell annuities. DPL’s software integrates with Envestnet to share annuity and insurance product data with advisors. Another fintech provider of annuities product data is Luma Financial Technologies, which is used by both CBS Brokerage and Triad Partners. Luma’s Lifecycle Manager lets advisors view annuity policies they’ve sold to clients, compare potential outcomes, and identify potential annuity upgrades within portfolios as forthcoming rate cuts could impact pricing of annuities. 

“The risk of rate change is continuing to hover over everybody at the fed; what we’re seeing is a lot of activity on our platform around evaluations of a 1035 [exchange] or replacement, where they would take funds out of an existing annuity and redeploy them into an annuity with some more attractive interest rates, especially the multi-year guaranteed annuity space,” says Jay Charles, director of annuity products at Luma.