Fee-based annuities are about 1% of premiums as insurers court RIAs

Nick Strain spent more than a year building a retirement income plan for one client around four separate annuities, and Halbert Hargrove charged no advisory fee on any of them.

The engagement, recounted to InvestmentNews, shows the tension fee-only advisors live with on annuities: the contracts do something a stock-and-bond portfolio cannot, guaranteeing income, but the way a fee-only RIA gets paid gives it no billing line for the work of providing that guarantee. Strain, a senior wealth advisor and chair of the wealth advisory committee at Halbert Hargrove, makes the client case directly—guaranteed income offers "a lot more safety than traditional diversified mutual fund or ETF portfolio," where there are no guarantees, and it "does put clients at ease."

Scale does not make that year free. Halbert Hargrove reports about $4.2 billion in regulatory assets under management across roughly 4,900 accounts, with 52 employees and 20 representatives, per PWD's records, so the firm can put senior people on a single plan for a year but has no commission to collect when the plan leans on a contract.

Annuities arrive at the firm by two routes: a new client who shows up holding an old contract and no memory of why it was bought, and a conservative client near retirement sitting in cash, CDs or Treasuries with little appetite for more equity risk. In the first case, surrendering the contract can trigger a large tax bill, so Strain often uses a 1035 exchange—the tax-free transfer from one annuity contract to another—to capture a higher payout rate or move the client out of a variable contract and into an indexed product with a floor. For the second, staying conservative is fine, Strain said, but a long stretch in Treasuries or high-yield cash "might not be the best long-term solution" for that client.

Over the past five years, he said, more clients have joined the firm already holding annuities, and the onus has moved: advisors at Halbert Hargrove increasingly want annuities folded into the financial plan themselves rather than learning six months later that a recommendation was made elsewhere. "I'd rather be part of the conversation," he said, and as a posture, it is hard to fault: the advisor who owns the plan should know about the income guarantee embedded in it, and in a fee-only model should understand that this oversight comes with no revenue attached.

The figure that sizes the gap came from Strain, citing a 2025 LIMRA study: only about 1% of total annuity premiums come from fee-based products, but the broader market is not standing still. The annuity industry hit a record $464.1 billion in sales last year, insurers expect the RIA share to move, and 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.

The arithmetic behind that 1% explains the persistence: a commission-free RIA earns nothing on a contract it recommends, and when a client shifts cash or a maturing CD into an annuity, the premium leaves the fee-paying asset base. The advisor absorbs the comparison work, the due diligence and the paperwork—a year of it in the case Strain describes—and watches the billable pool shrink for having done it, while the product a fee-only book already runs on is a diversified portfolio that charges basis points in perpetuity, carries no commission conflict and needs no unfamiliar expertise to recommend. The annuity is the better answer for a slice of clients and the worse business for the firm, and advisors know it.

Strain names knowledge as the first obstacle, and it is real: annuities are a dense product set, variable and indexed and immediate and deferred, with riders, floors and payout-rate tables, and most RIA training pipelines never taught them, so a firm that wants to handle them must build competence it cannot hire off the shelf. Knowledge, though, is the soluble problem; the compensation model is the stubborn one, and no survey reading moves it.

What would move it is whether the fee-based share of premiums stirs off 1% as insurers push product into the channel they expect to grow fastest. Until an RIA can bill on the guarantee the way it bills on the portfolio, the year Strain spent will keep looking like uncompensated service—defensible advice with no line item behind it.