Nick Strain spent more than a year building a retirement income plan for one client out of four separate annuities. His firm didn't charge an advisory fee on any of them.
That trade-off shows where annuities stand for many fee-only registered investment advisors. The products solve problems a stock-and-bond portfolio can't, but the work of using them still fits awkwardly inside an RIA practice.
"Providing guaranteed income provides a lot more safety than traditional diversified mutual fund or ETF portfolio. [where] there's no guarantees," said Strain, senior wealth advisor and chair of the wealth advisory committee at Halbert Hargrove, in a recent interview with InvestmentNews. "Guaranteed income does put clients at ease,"
At Halbert Hargrove, Strain sees two common entry points for annuity conversations. The first is a new client who arrives holding an old annuity and has forgotten why they bought it. Cashing out can trigger a large tax bill, so he often uses a 1035 exchange – a tax-free transfer from one annuity contract to another. The exchange can capture a higher payout rate or move the client from a variable contract into an indexed product with a floor.
The second scenario involves conservative clients nearing retirement with large positions in cash, CDs or Treasuries and little appetite for more stock market risk.
"You want to stay conservative, but maybe being in Treasuries or cash, high-yield cash for a long period of time might not be the best long-term solution for you," he said.
An increasing number of clients have joined the firm with existing annuities over the past five years, Strain said. And as more people take an interest in the products, he said there's a growing onus for advisors to incorporate annuities into clients' financial plans at the firm, as opposed to them getting recommendations elsewhere.
"I'd rather be part of the conversation than find out what happened six months later and not be happy with whatever was recommended," he said.
Citing a 2025 LIMRA study, Strain said only about 1% of total annuity premiums currently come from fee-based products, which has hindered adoption among RIA firms that operate on a fee basis. The broader annuity industry, meanwhile, hit a record $464.1 billion in sales last year.
For their part, insurers expect annuity uptake to grow among RIA firms. In Goldman Sachs Asset Management's 2025 Annuity Industry Survey, 45% of respondents named the RIA channel as the one likely to see the most growth over the next three years.
For a fee-only fiduciary that takes no commissions, the obstacles start with knowledge. "The challenge for a firm like us or other fiduciary firms is to have the expertise and experience of annuities because annuities can be pretty complex and they're forever changing," Strain explained.
Infrastructure is another obstacle. As Strain explained, annuities require their own paperwork outside standard custodian workflows. Firms must also decide whether to build expertise in-house or rely on a third-party insurance platform.
"For our normal custodians where we have to rebalance accounts, we can do hundreds of clients in a morning. And for insurance, if we're going to try to rebalance or make investment changes, it's typically one-off, one at a time," Strain said.
Client education adds another layer of complexity. While there's a growing number of ways to evaluate annuity options on the market, advisors must still walk clients through several decisions: whether to annuitize or defer, which riders to choose, investment options, caps, fees and surrender schedules.
"The fees are a big one, just because the fees [on annuities] are much greater than typical either stock or bond mutual funds or ETFs," he said.
Registered index-linked annuities (RILAs) need their own portfolio conversation, because an income floor doesn't necessarily protect the underlying investment value. "With registered indexed annuities, if you're investing in, say, an S&P equivalent, the investment value can go down," Strain said.
In terms of his wish list for carriers and insurtech platforms, Strain said he would like to seek tools that walk clients through different options based on their financial goals; stronger back-office support for paperwork and ongoing monitoring; tighter integration with portfolio management, planning and CRM systems; and shorter surrender fee schedules, which currently can run as long as seven years.
"Hopefully some of the fees will come down, just like in the investment world," he said.
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