Removing barriers to annuity adoption in 2026

By Rich Romano

With 2026 on the horizon, the insurance sector is confronting a landscape defined by market volatility, demographic pressure and a renewed appetite for guaranteed income. These forces are converging to elevate variable annuities as a central tool for advisors seeking durable retirement solutions. Although no forecast is absolute, current trends point to a meaningful uptick in annuity adoption in the coming year, even if the product mix looks different than it does today.

For one thing, with a record number of Americans continuing to reach retirement age, we have more investors who realize they are only a few years away from retirement. These investors will search for financial products that can offer income or asset protection. According to the Alliance for Lifetime Income, 2025 has seen the largest surge of Americans turning 65, and more than 4.1 million Americans will turn 65 each year through 2027. This huge demographic, and the advisors who work with it, can potentially benefit from the asset protection and secure guaranteed income associated with annuities. This may contribute to a strong uptick in annuity sales in 2026.

In addition to demographics, expectations of further interest rate cuts and potential equity market volatility may also cause a spike in sales in 2026.

Insurance overlays remove significant barrier to advisor adoption

As the saying goes, necessity is the mother of invention, and the development of insurance overlays will likely enable more financial advisors to incorporate annuity benefits into their wealth and retirement planning offerings. Carriers are becoming more comfortable with an annuity structure that does not require a transfer of assets to the carrier, thus allowing the advisor to still manage the entirety of their clients' assets.

The financial advisor understands their clients’ financial goals and needs better than anyone. Allowing clients to maintain control of the assets and how those assets are invested, while adding a guaranteed source of income or protection, adds both transparency and simplicity to an otherwise complex subject. We believe this will attract advisors to the annuity space who have otherwise largely ignored them as a viable option.

The development of insurance overlays coincides with other technological innovations that are further accelerate the adoption of variable annuities by wealth managers. For example, firms such as Fidelity, Pershing and Schwab now offer unified managed accounts, which allow multiple investment sleeves to be managed within a single account opening process and a single operational strike. UMAs were developed a while ago, but the evolution of technology in recent years has facilitated their tremendous growth.

Now an advisor can use an insurance overlay on a single UMA sleeve, which enables the advisor to manage it holistically as part of a client’s overall portfolio. As annuities move from stand-alone products to integrated planning tools, advisors’ attitudes are evolving, along with their ability to unlock the full value these products offer.

Furthermore, tech innovation and product development also lead to operational efficiency and simplicity. It wasn’t long ago when exchange-traded funds could not be managed with single-click trades; now they can be. Insurance providers have long wanted to develop a five-minute process for annuity approval and onboarding. However, the insurance industry has typically lagged far behind other areas of financial services in terms of tech innovation.

Removing the time-consuming annuity application

With the ongoing uptick in the adoption of annuities by broker-dealers and registered investment advisors going into 2026, insurance providers will have a more convincing case when they approach regulators and advocate for steps to do away with the manual, time-consuming application. When insurance carriers can demonstrate the higher demand for their products from a highly digital industry (wealth management), then they can make a stronger appeal to harness data and artificial intelligence to create an end-to-end, quick digital annuity experience.

Greater recognition of annuities as essential portfolio building blocks, along with innovations that allow advisors to seamlessly incorporate them into holistic wealth management approaches, positions 2026 as a promising year for the industry.