Why RIAs are the next growth frontier for annuities

The RIA channel is set to be the next near-term growth opportunity for the annuity industry – and according to one leading voice in the space, it's been a long time coming.

In its latest annuity industry survey report published earlier this month, Goldman Sachs Asset Management found 45% of respondents from the insurance industry expect the biggest growth in the registered investment advisor channel over the next three years, outpacing the independent space (38%) and wirehouses (8%).

"These findings align to broader industry trends focused on high net-worth investor needs and demand for RIA support moving upmarket on the wealth spectrum," the report from Goldman Sachs said.

According to the authors, this year's findings mark a shift from previous surveys, where respondents had the highest hopes for the independent channel.

For David Lau, founder and CEO of annuity platform DPL Financial Partners, it's a shift that's been years in the making.

"Financial services has long been moving to consumer value, and moving from transactional revenue and commissions to fee-based revenue from financial advice,' Lau told InvestmentNews.

While advisors have steadily shifted their portfolio allocations toward low-cost investments over the years, Lau says annuities have been the exception. Part of that comes down to the complexity in those protected income products, which makes them more durable against price competition compared to mutual funds and ETFs.

"As a consumer, you're typically just getting whatever your rep's favorite product is," he says. "Maybe it's got the best sales story, or it has a gimmicky feature that's easier to sell."

To help bring the industry around, Lau says DPL has long worked with carriers to eliminate commissions in their products, which he says brings down costs for end consumers while removing the associated conflicts of interests for RIAs.

"[We also] bring technology to play that enables comparisons of annuities," he adds. "It's about trying to drive value to the end consumer and working with fiduciary advisors, not salespeople."

A flight to fiduciary advice

Alongside the growing trend toward holistic wealth management, Lau noted that the RIA industry has grown to far surpass the broker-dealer channel. 

Looking by the numbers, the latest 2025 snapshot report from the Investment Adviser Association counted nearly 16,000 SEC-registered RIAs as of 2024, collectively managing $144.6 trillion. Meanwhile, new figures made public by the Securities and Exchange Commission last week found 3,340 BDs with total assets of roughly $6.4 trillion, noting that the number of broker-dealers has shrunk amid a continuing trend of industry consolidation. 

"People are leaving the independent broker-dealers and coming to the RIA channel, and a lot of them have been historic annuity users," Lau says. "So you're losing some of the annuity volume that would have gone through the broker-dealer channel, as advisors go to the RIA space and take their productivity with them."

In many cases, he says the ability to do business with annuities is the last thread keeping an advisor from leaving their broker-dealer firm. But with the proliferation of fee-based annuities, advisors are all the more willing to cut the cord.

"We're seeing lots of big firms going completely RIA now because they simply don't need the broker-dealer anymore," Lau says. "I think you're going to see a big acceleration in that [direction] over the next number of years. Some of the broker-dealers are trying to save some of that AUM with various fee-based offerings."

It's worth noting that Osaic, a giant broker-dealer and RIA with roots in insurance, is rolling out a direct billing capability for fee-based annuity products on its platform. In a release announcing the new feature, Shannon Larson, senior vice president, Osaic Platform Management & Product Development, said the enhancement "makes it easier to incorporate annuities into comprehensive financial plans without added complexity."

In an emailed statement to InvestmentNews, Larson said the rollout of direct-billed solution would begin with fee-based annuities from Nationwide. The firm's platform also offers fee-based annuities from Allianz, Brighthouse, Corebridge, Equitable, Jackson, Lincoln, MassMutual Ascend, Pacific Life, Prudential, and Transamerica.

"Through product innovation and the industry shift towards fee-based solutions, we are seeing a growing portion of these recommendations be through RIA channels," Larson said.

Speaking from decades of experience working with advisors, Lau says helping clients build wealth has long been the advisory industry's strong suit. But when it comes to decumulation, he says advisors have tended to lean on the 4% withdrawal rule, which may not work so well in a world where people are living longer and the future of Social Security isn't so certain.

"So many advisors have no idea about annuities. They only have high-level reactionary opinions on them," he says. "Annuities are purposely build to create income and address all kinds of risks. They really need to be in many people's retirement plan ... advisors have to understand, this is about handling more things for a client than just investments and wealth accumulation."