Why Aren't More RIAs Offering Annuities? Flourish President Blames Weak Tech

Flourish can feed annuity data from multiple carriers straight into RIAs’ wealth management systems, and it offers an outsourced insurance desk that can execute the annuity purchasing transactions without triggering advisor fear of client poaching.

The thinking: Flourish points to sales reports showing that RIAs may account for less than 0.5% of U.S. individual annuity sales.

Aspida, for example, generated $2 billion in annuity sales in 2023 but just $30 million in sales through RIAs, according to Chad Burns, the insurer’s chief distribution officer.

Cruikshank said that, in spite of all of the news reports about rapid advances in annuity distribution tech, RIAs that try to offer annuities still run into a system that relies heavily on big PDF files, the U.S. Postal Service and transactions that take several weeks to complete.

Today, he said, an RIA can move 1,000 clients’ cash from one mutual fund to another with a few clicks.

The RIA might have to face a 40-page prospectus and a 45-minute client discussion to sell one annuity.

“Then there’s still, ‘Mail in a paper check at the end of it,’” he said.

RIAs could simply refer the clients who need annuities to annuity agents, but “they want to be at the center of their clients’ finances,” Cruikshank said.

Even if the RIAs could overcome competitive concerns, he said, they may resist working with an outside company because they and the clients believe that an advisor should simplify a client’s finances and centralize management of the client’s financial arrangements in one place.

A new, tech-focused annuity issuer like Aspida has easy-to-use, responsive systems that help advisors complete transactions quickly, Cruikshank said.

“The rest of the industry has a lot of catching up to do,” he said.

Correction: An earlier version of this article described Aspida’s history of acquisitions incorrectly. 

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