By the InvestorCOM Team | ~7 min read

Variable annuities have always sat near the top of FINRA’s exam priority list, but recent guidance and enforcement activity make clear the bar has moved. As Norton Rose Fulbright recently observed, FINRA has “upped regulatory scrutiny” of variable annuities, with examiners zeroing in on exchanges, RILA recommendations, Reg BI’s Care Obligation, and the documentation that proves it all.¹ For chief compliance officers and Wealth leaders, the message is straightforward: the controls you had two years ago are unlikely to clear the bar today.²

 

Where FINRA is looking

FINRA’s 2025 and 2026 Annual Regulatory Oversight Reports highlight a consistent pattern of findings across annuity programs:²,³

• Unsuitable exchanges, VA-to-VA and VA-to-RILA exchanges that increased mortality, expense, administration, or rider fees, imposed surrender charges, or stripped away living-benefit value.
• Reg BI Care Obligation lapses, recommendations to surrender existing annuities and purchase RILAs without a reasonable basis or a documented best-interest rationale, even when structured as a 1035 exchange.
• Insufficient consideration of reasonably available alternatives (RAA), a recurring deficiency under Reg BI’s Care Obligation.⁴
• False or misleading transaction paperwork, misrepresentations such as understated surrender charges, omitted prior exchanges, or incorrectly identifying the source of funds.
• Weak supervisory procedures, WSPs that fail to meet FINRA Rule 2330 or Reg BI expectations for exchange surveillance, age-based suitability, and concentration.⁵

RILAs amplify all of this. The market has more than quintupled since 2017, with $47.4 billion in RILA sales in 2023 alone, and RILA-to-RILA exchanges are now an explicit FINRA focus area.⁶ Examiners expect firms to apply Rule 2330–style controls to RILAs even though the rule does not technically reach them.²

 

The compliance gap

In conversation after conversation with broker-dealer and compliance leaders, the same operational gaps surface: advisors comparing annuities by hand or in spreadsheets, exchange rationales that read identically across unrelated clients, surrender-charge math captured inconsistently across paper and PDF forms, and supervisors trying to second-line review trades without a structured RAA record. None of that holds up against FINRA’s current expectations ,  and none of it scales as RILA volumes grow.

 

PeerCompare Annuities: turning regulatory expectation into repeatable workflow

InvestorCOM’s PeerCompare Annuities was purpose-built for this regulatory environment. It is the only annuity recommendation platform that operationalizes Reg BI, FINRA Rule 2330, NAIC Best Interest, and NY Regulation 187 in a single workflow ,  across Fixed Rate, Fixed Indexed, RILA, and Variable Annuities.⁷

• Documented RAA, every time. The RAA Ranking Engine scores reasonably available alternatives across Outcome, Cost, Liquidity, and Stability so advisors can defend each recommendation with objective, client-specific data, directly addressing FINRA’s most cited finding.
• Built-in exchange and 1035 controls. Replacement workflows force a structured comparison of fees, surrender periods, riders, and benefit-base impact, producing the exchange disclosure FINRA explicitly identifies as an effective practice.²
• Context-aware guardrails. Recommendations are filtered against the firm’s approved product shelf, age- and concentration-based rules, and supervisory thresholds, closing the WSP gaps highlighted in the Oversight Report.
• Audit-ready documentation. Every proposal, rationale, and disclosure is auto generated, delivered, and retained, eliminating the misrepresentation and recordkeeping issues regulators keep finding in transaction paperwork.
• Supervision and surveillance, by design. Principals review structured records, not free-text rationales, and exception-based surveillance flags exchange velocity at the rep, branch, and product level.

 

Mitigating risk is the floor. Growing the practice is the ceiling.

Compliance leaders are increasingly asked to enable growth, not just prevent loss. PeerCompare Annuities does both. By replacing manual forms with a ‘proudly simple’ digital workflow, advisors complete suitability and best-interest analysis in minutes instead of hours, branded investor proposals strengthen client conversations and approved-product guardrails let firms confidently expand into RILAs and complex riders without taking on uncontrolled supervisory risk. The result: more annuity business written, written defensibly, and written faster.

 

What to do next

If your firm’s annuity program still relies on:

1. manual comparisons,
2. free-text rationales, or paper forms,

FINRA’s current findings will likely apply to you on the next exam. The fix is not more policy language,  it is a workflow that produces the evidence regulators are asking for, every time an advisor recommends an annuity.

See how PeerCompare Annuities helps your firm meet Reg BI, FINRA Rule 2330, and the 2026 Oversight Report’s expectations, and grow the annuity practice while doing it. Request a demo.

 

Footnotes

1. Norton Rose Fulbright, FINRA has recently upped regulatory scrutiny of variable annuities. https://www.nortonrosefulbright.com/en-us/knowledge/publications/264888ce/finra-has-recently–upped-regulatory-scrutiny-of-variable-annuities ↩
2. FINRA, 2025 Annual Regulatory Oversight Report ,  Annuities Securities Products. https://www.finra.org/rules-guidance/guidance/reports/2025-finra-annual-regulatory-oversight-report/annuities ↩ ↩² ↩³ ↩⁴
3. FINRA, 2026 Annual Regulatory Oversight Report (December 2025). https://www.finra.org/sites/default/files/2025-12/2026-annual-regulatory-oversight-report.pdf ↩
4. SEC, Regulation Best Interest (Reg BI). https://www.sec.gov/regulation-best-interest ↩
5. FINRA Rule 2330, Members’ Responsibilities Regarding Deferred Variable Annuities. https://www.finra.org/rules-guidance/rulebooks/finra-rules/2330 ↩
6. LIMRA, Record-High 2023 Annuity Sales (Mar. 12, 2024), as cited in the 2025 FINRA Annual Regulatory Oversight Report; RILA sales reached $47.4B in 2023, more than 5x 2017 levels. https://www.limra.com/en/newsroom/news-releases/2024/limra-record-high-2023-annuity-sales-driven-by-extraordinary-growth-in-independent-distribution/ ↩
7. InvestorCOM, PeerCompare Annuities product overview. https://investorcom.com/products/peercompare-annuities/ ↩