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A slight increase in use

Part 1: A slight increase in use

On average, advisors report that 25% of client assets are in variable annuities.

Sponsored by Lincoln Financial

That’s an increase of a few percentage points over the previous year’s finding (22%). The increase is present across all industry channels, although it is most pronounced
among advisors working in insurance firms (+4 percentage points) and least pronounced among advisors from independent firms (+1 percentage point).

Most advisors hold less than 50% of their client assets in variable annuities (see below), which is consistent across industry channels. However, there are some
differences in patterns among industry channels within that range. For instance, nearly half of advisors from large firms (49%) use these products at a modest level (10 to 24% of client assets in variable annuities). This represents a shift from 2016, when advisors from large firms were most likely (46%) to report having less than 10% of client assets in these products. It appears that variable annuities have gained favor among advisors from larger firms, although the products still play only a modest role in client portfolios.

By comparison, advisors from independent firms appear divided, with a subset (typically independent broker dealers) using variable annuities at a higher level than
their peers, while others (generally independent RIAs) are using these products at a reduced level. The results show that advisors from this channel are most likely (39%) to report that they use variable annuities for less than 10% of client assets. But they are also twice as likely (23%) as advisors from large firms (12%) to report that they hold a quarter to a half of client assets in variable annuities. These results are consistent with 2016, and suggest independent broker dealers are using these products more than their RIA counterparts.


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