Annuity Arms Race: Why Fierce Competition Is Fueling Innovation—And Why Advisors Must Lead with Strategy, Not Sizzle

Here’s a reality check:
The annuity industry just logged its sixth straight quarter over $100 billion in sales, and some carriers—like Lincoln Financial—posted a 33% year-over-year increase in annuity production.

But this isn’t just a numbers game. It’s a signal: the competitive pressure is on, and issuers are innovating fast to stay relevant. New crediting strategies. Smarter allocation tools. Flashier marketing campaigns. Even AI.

And while that innovation is exciting, it’s also a double-edged sword.

Because with every new feature or index comes a new question for advisors: Are we actually improving outcomes—or just adding noise?

The Innovation Boom: What’s Fueling It?

Issuers are no longer competing just on rates or rider costs. They’re reinventing annuities to feel more modern, more flexible, and more personalized.

Here’s what we’re seeing:

• Dynamic Credit Strategies: Products now feature dual-direction crediting, high-water marks, and lookback periods. Great in theory—but often confusing in practice.

• Preset Allocations: Athene, for example, launched simplified, pre-built allocation models to make fixed indexed annuities more accessible. Smart move—but do they match client goals?

• AI-Powered Planning Tools: Carriers are integrating AI to help advisors recommend optimal annuity allocations and simulate retirement income strategies. Cool tech—but is the logic transparent?

Translation: We’re entering the age of productized planning. And it’s only useful if it serves the client’s purpose—not just the marketing team’s pitch deck.

What the Data Tells Us

Let’s look at the growth that’s driving this push:

• Q1 2025 U.S. Annuity Sales: $105.4 billion

• Lincoln Financial Annuity Sales YoY Growth: +33%

• RILA Growth: +21% YoY

• FIA Sales: Still high at $26.7 billion, despite a 7% YoY decline

This isn’t about a single product. It’s a broad-based boom. But with more players entering the space—and each vying for attention—the product shelf is getting crowded, fast.

Critical Perspective: Innovation Without Clarity Is Risk

Here’s the downside of the arms race: Complexity creeps in. And if we’re not careful, that complexity becomes a liability—for clients, for compliance, and for our credibility.

Let’s be blunt: You shouldn’t need a Ph.D. in option pricing theory to explain an annuity contract.

Too often, product differentiation turns into obfuscation. The worst-case scenario? A client buys something they think is safe, growth-oriented, or income-guaranteed—only to be surprised later.

What Advisors Should Do Right Now

1. Lead with Planning, Not Product

Start with the plan, not the features. Use annuities to solve real problems—longevity risk, income volatility, behavioral missteps—not just to show off the newest shiny object.

Tip: Build your conversations around jobs to be done—then plug in the product that fits.

2. Master the Middle Ground

Don’t be a Luddite—or a hype machine. Be the translator. Your value is in helping clients navigate the growing complexity of annuities and understand what actually improves outcomes.

Tip: Create a comparison chart of your top three annuity offerings. Break down their crediting methods, liquidity, income riders, and real-world use cases.

3. Hold the Industry Accountable

Carriers will keep innovating. That’s great. But we need to pressure them for simplicity, transparency, and ethical positioning. Innovation should benefit the client, not just goose sales numbers.

Tip: Start asking reps harder questions. Not just “what’s the cap?” but “how does this product outperform others in volatile markets—net of fees?”

Ethical Angle: Who Are We Building For?

As competition intensifies, we must ask: Is innovation actually solving consumer pain points—or just carving market share?

Let’s champion products that:

• Prioritize long-term outcomes

• Offer transparency over trickery

• Empower clients, not confuse them

• Complement—not replace—comprehensive planning

Because that’s how we build trust, not just contracts.

Final Word: Don’t Just Sell the Future—Shape It

The annuity market is transforming. And yes, the competition is fierce. But that’s not a cue to race to the bottom—or to pile on features without purpose.

It’s a cue to level up.

Be the advisor who cuts through complexity, aligns products to purpose, and advocates for innovation that’s actually in the client’s best interest.
Because that’s how you don’t just survive a product war—you win the trust war.