Beyond the Billions: What Q1 2025’s $105.4B Annuity Sales Reveal—and What Advisors Must Do Differently

If the annuity industry is breaking records, why do so many consumers still feel like they’re gambling with their retirement?

That’s not just a rhetorical question. It’s a challenge to our industry to match booming sales with equally strong consumer outcomes.

In Q1 2025, annuity sales in the U.S. reached a staggering $105.4 billion, marking the sixth consecutive quarter over the $100B mark. The headlines sound great—and to be clear, there’s real momentum here. But underneath the surface, this growth raises deeper questions about product positioning, advisor behavior, and whether we’re truly aligning sales with service.

Let’s break it down.

The Breakdown: What’s Fueling the Momentum?

According to LIMRA and other top-tier sources:

• Registered Index-Linked Annuities (RILAs) surged 21% YoY to $17.5B, reflecting a hunger for growth without full downside exposure.

• Variable Annuities (VAs) jumped 14% YoY to $15.6B, riding the equity market wave and a more strategic push from broker-dealers.

• Fixed-Rate Deferred (FRD) Annuities dropped 8% YoY, but rebounded 35% QoQ, showing that safety is still selling—just more selectively.

• Income Annuities (SPIAs and DIAs) slumped 17–19% YoY, suggesting the rate-sensitive “set-it-and-forget-it” crowd may be sitting on the sidelines.

We’re seeing product bifurcation—the market is split between those chasing upside and those still craving principal protection. And both trends are perfectly rational in today’s environment.

But here’s the kicker: product innovation is outpacing advisor education. And that’s a problem.

Critical Insight: Innovation ≠ Understanding

Let’s be honest—most consumers (and more than a few advisors) still don’t fully grasp how RILAs work. They’re sold on “some growth, some protection,” but ask them about buffer levels, participation rates, or volatility control mechanisms, and things get murky.

We can’t let marketing sizzle outshine fiduciary substance.

Financial professionals must upskill—fast. Especially as annuities become more complex and the retirement wave crests with “Peak 65.” The last thing we need is a decade defined by regret from poorly matched annuity strategies.

Actionable Takeaway: Build client-centric product comparison frameworks that map goals to contract mechanics. Not just features. Function. Ask: What job is this product being hired to do?

The Opportunity: Rethinking Sales Narratives

The annuity rebound is happening in spite of lingering public distrust—not because we’ve won the hearts and minds of a skeptical population.

If we want to change that, we need to flip the script:

• Stop leading with features. Start with outcomes.

• Stop selling safety. Start selling strategy.

• Stop assuming trust. Start earning it—contract by contract.

Advisors have an opportunity to position themselves as architects of sustainable retirement income, not just distributors of annuity products.

Actionable Takeaway: Ditch the “this annuity solves everything” approach. Instead, frame annuities as components in a diversified retirement income strategy that includes time segmentation, tax diversification, and contingency planning.

The Missed Moment: Where the Industry Still Falls Short

Despite strong sales, income annuities are declining. That’s telling.

It suggests that we still struggle to help clients see the value of guaranteed lifetime income—even when they need it most. Why? Because it’s easier to sell hope than math. But real retirement security demands both.

Meanwhile, many firms are doubling down on flashy indexes, AI-powered allocations, and participation rate gimmicks instead of simplifying value propositions and training advisors to lead with clarity.

Critical Question: Are we building better products—or just shinier distractions?

Strategic Outlook: What Financial Professionals Should Do Now

Here’s how forward-thinking advisors can lead the next phase of growth—ethically, effectively, and strategically:

1. Reposition Annuities as Insurance, Not Investments
   Drive the conversation back to protection, longevity risk, and income—not just hypothetical growth projections.

2. Push for Higher Industry Standards & Simplified Contracts
   Advocate for contracts that clients can actually understand. Complexity erodes trust.

3. Use the “3P Filter”
   Every product recommendation should align with:

• Purpose – What’s the role in the broader plan?

• Performance Triggers – Under what market conditions does it succeed/fail?

• Payout Logic – How does it actually benefit the client, and when?

4. Stay Rate-Aware, Not Rate-Dependent
   Build plans that work regardless of where interest rates go next. That means balancing FRDs with indexed and income strategies—and understanding when each fits.

Final Word: Sell Less. Serve More.

Yes, $105.4 billion in quarterly sales is impressive. But it only matters if those dollars translate to durable outcomes for the clients we serve.

So let’s ask ourselves:

• Are we positioning annuities as reactive band-aids—or proactive building blocks?

• Are we educating clients—or just closing them?

• Are we proud of the industry we’re shaping—or just riding the wave?

Because momentum without direction is just drift.

If you’re an advisor ready to shift from product-pushing to purpose-driven planning, now’s the time. The market is hot—but your clients deserve more than heat. They deserve light.