Annuity distribution thriving, but many challenges lie ahead

NEW ORLEANS – Annuity products are selling historically well. That does not mean there isn’t pressure building on the distribution level.

The search for producers, potential disruption from in-plan annuities, and “irrational pricing” are all challenges to distribution channels. A panel of executive experts dissected those issues and more Tuesday during the 2025 Life and Annuity Conference, hosted by LIMRA and LOMA, ACLI and SOA.

Insurance producers are an aging group and are not being replaced at a high enough rate. In simple terms, young people are not very interested in becoming insurance agents.

John Gies is head of MassMutual Financial Advisor brokerage sales at MassMutual. With a field force of 6,500 advisors that MassMutual hopes to grow to 8,000, Gies said the firm is stressing the positive and important work of financial planning.

“We've invested a lot into educating our field force and our firm, our agencies, around what they need to do around succession planning,” he said. “Providing the tools, providing the resources, providing the programs that enable a smooth succession.”

That goes hand-in-hand with treating new recruits with respect. The days of throwing a phone book at a young new agent and telling them they need to generate $20,000 worth of commissions by the end of the year are over, Gies said.

“This concept of team, where you can come in on experience team, learn from advisors, learn as you go, I think is a new model for bringing the future generation of advisors into the business,” he added.

In-plan annuities on the rise

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) passed in 2019 and included several initiatives aimed at making it easier for Americans to save for retirement. It was later expanded by SECURE Act 2.0 in 2022.

One of the biggest things the SECURE legislation did is provide a safe harbor for plan sponsors to offer annuities inside retirement plans. Those in-plan annuities are doing really well as new partnerships form between life insurers and investment firms. BlackRock’s LifePath Paycheck is one such in-plan annuity effort.

But challenges remain with many products too complicated to fit the plan market, said Greg Jaeck, senior product director, retirement products for Edward Jones. You’ve got participants, plan sponsors, third-party administrators and fiduciaries with oversight all of whom have a stake in retirement plans.

“I think in order to be successful, you got to get them on board, and you have to have very, very simplistic products overall,” Jaeck said. “I think a lot of the products right now have a little bit of moving parts, and it's hard to explain overall. So, I think over time this is going to happen. It will take some time.”

Pricing concerns

The free market premise is that competition will bring out the best values. That concept might not work as well when it comes to annuity rates, Gies said. In preparing for the LIMRA session, Gies said he asked a MassMutual annuity executive for a list of industry concerns. “Irrational pricing” was on the list.

In other words, some annuity sellers are offering ultra-attractive annuity rates just to get business. It’s a strategy that annuity sellers regretted in the past. Notably, when a hot variable annuity market fueled a “living benefits arms race” in the 2006-08 timeframe, Gies recalled. Many of those companies later regretted those guarantees.

More recently, PHL Variable Insurance Co. was placed into rehabilitation by a Connecticut court. Insurance Commissioner Andrew Mais expects to complete a rehabilitation plan for the financially troubled PHL Variable sometime this year.

“We've seen folks taking it up to the line, right in terms of what we're offering out in the marketplace,” Gies said. “Leaning into that sales opportunity with responsible pricing is a mandate that we, as an industry, all carry."

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.