The regulatory environment for annuity sales in 2025 is shaping up to be more favorable than it has been in years. With the Department of Labor’s (DOL) fiduciary rule critically stalled and a broader political shift toward easing regulatory oversight, advisors will likely face fewer compliance burdens while gaining greater flexibility in annuities and IUL. While overall annuity sales may level off after record-breaking years, certain products—especially Fixed Index Annuities (FIA) and Registered Index-Linked Annuities (RILA)—stand to benefit from shifting market conditions and regulatory clarity.
Fiduciary Rule: A Fading Threat
The DOL’s “Retirement Security Rule,” which sought to expand fiduciary responsibilities under ERISA, remains in legal limbo. In February a federal judge granted the DOL a pause on its appeal of two industry-favorable court stays, making it increasingly unlikely the rule will take effect in its current form. While not officially dead, its demise seems inevitable, allowing advisors to continue operating under the existing regulatory framework.
Regulatory and Legal Updates Shaping 2025
The SEC has introduced new disclosure requirements aimed at enhancing transparency in annuity sales. In mid-2024, the agency mandated that non-variable annuities follow similar reporting guidelines as variable annuities, requiring more structured disclosures to improve investor understanding. While this adds some administrative burdens, it does not impose significant compliance hurdles on IFAs
Meanwhile, FINRA has reaffirmed its focus on annuity sales practices in its 2025 oversight report. While the broader regulatory climate is shifting toward deregulation, FINRA remains vigilant on product suitability, conflict management, and fee transparency. No new rules have been introduced, but advisors should ensure their recommendations are well-documented and aligned with clients’ financial goals.
Market Conditions Favor FIA & RILA
Even as annuity sales stabilize from record highs, demand remains strong for solutions that balance growth potential with downside protection. FIAs and RILAs stand out as attractive options in a volatile market, offering clients a way to participate in market gains while maintaining principal protection. With more investors prioritizing secure retirement income, these products will continue to play a crucial role in financial planning. Advisors who understand how to position them effectively will have a competitive edge.
Other Legislative Initiatives
Several proposals could impact annuity sales and retirement planning. The Automatic IRA Act of 2024 would require employers without retirement plans to auto-enroll employees in IRAs, potentially driving more annuity adoption. The Retirement Fairness for Charities and Educational Institutions Act seeks to amend securities laws for variable annuities, making them more cost-effective for 403(b) participants. Meanwhile, the National Association of Insurance Commissioners (NAIC) continues refining its Suitability in Annuity Transactions Model Regulation, reinforcing consumer protections and enforcing a best interest standard.
Balancing Opportunity and Responsibility
The political and regulatory landscape appears increasingly favorable for advisors, offering greater flexibility and fewer compliance hurdles. However, ethical and professional standards remain critical. Advisors should continue to observe best practices in handling client data, maintain thorough record-keeping, and ensure all recommendations align with their clients’ best interests. A lighter regulatory touch doesn’t mean lower expectations—advisors who prioritize transparency and client-first strategies will be best positioned for sustainable success in 2025. Advisors can take advantage of these regulatory shifts, taking the opportunity to build trust, differentiate their practice, and close more business in this expanding sales environment.