Majority of polled financial pros agree annuities make client relationships stickier

As annuity sales continue to climb across the industry, new research suggests financial professionals are finding an added benefit in the products beyond income guarantees and downside protection: stronger client relationships.

According to a recent Nationwide survey of 504 financial professionals conducted with Zeldis Research, nearly three in four respondents who sell annuities said the products help them retain clients. Among higher-volume sellers – those who completed 10 or more annuity transactions over the past two years – that figure rose to 81 percent.

The survey, conducted online in September 2024, included advisors across the broker-dealer, wirehouse and RIA channels.

“It’s no surprise financial professionals are leveraging annuities in client portfolios as evidenced by another record-breaking year of sales in the annuity industry,” Rona Guymon, senior vice president of Nationwide annuity distribution, said in a statement revealing the results. “What might be unexpected to some is the long-term relationship that can be built with clients as a result of an annuity purchase.”

Because annuities can be complex, Guymon says they often require more in-depth discussions with clients, which can open opportunities for advisors to strengthen trust and engagement.

The findings also underscore the broader role annuities play in helping clients navigate market uncertainty. Nine in 10 advisors surveyed said annuities provide protection against volatility, while 86 percent said the products contribute to portfolio diversification.

At least one piece of research from the Alliance of Lifetime Income found annuities can help retirees cope with anxieties brought about by inflation and rising costs of living. Out of the 37 percent of respondents who said they've started claiming Social Security benefits, 28 percent agreed it's wise to start early as they were concerned about future payment cuts, Social Security getting depleted, or dying before retirement age.

Still, adoption among clients remains relatively muted. Respondents to Nationwide's research estimated that only about 27 percent of their clients currently hold an annuity, even though most said they would prefer that closer to 38 percent did.

Among the hurdles to wider usage are client perceptions. While annuities have certainly come a long way, 60 percent of advisors said clients view the products as overly complex, while 78 percent reported that clients hold negative preconceived notions about the products. More than half of respondents said external media – such as podcasts and television commentary – were contributing to client hesitancy.

“While it’s fair for commentators to discuss why annuities might not be right for every investor, some investors may interpret that as meaning they are not right for any investor – which is not true,” Guymon said.

In response to these challenges, many advisors are turning to insurers for more education tools. Fifty-four percent of survey participants said they want more client-ready materials explaining annuities as a guaranteed income option, while 43 percent are looking for content on how annuities can fit into broader financial planning conversations.