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The Financial Industry Regulatory Authority is worried about consumers who give up registered index-linked annuities early.
FINRA included a stern warning about the possible impact on retirement savers in its new 2026 regulatory oversight report.
A saver might be able to count on getting a set amount of cash back if the saver keeps the RILA in place until the end of the term described in the RILA contract.
But, if the saver pulls cash out early, the "interim value" of the annuity might be much lower than the end-of-term value.
If an advisor tells RILA owners to make "partial withdrawals or full surrenders from RILAs 'mid-segment' without considering interim value risk," and the advisor has no "reasonable basis" for making those recommendations, the advisor could be violating the Regulation Best Interest requirements to act in the best interest of the customers, according to FINRA.
FINRA's annual oversight reports show what FINRA is thinking about regulatory trends and strategies.
What it means: Advisors who want to tell clients to surrender RILAs should understand what that will do to the value of the annuities.
Other annuity changes: The 2025 FINRA oversight report included a section highlighting FINRA's thoughts about emerging RILA trends.
This year, FINRA focused on emerging trends involving generative artificial intelligence systems, not RILAs.
But FINRA did expand a discussion of exchanges involving RILAs.
In 2025 report, FINRA warned against pushing customers to roll cash from traditional variable annuities into RILAs without careful thought.
In the new report, FINRA adds a warning against poorly thought-out recommendations for RILA-to-RILA exchanges.
FINRA also warns advisors against failing to think about what annuity replacements or exchanges will do to a variable annuity's living benefits and features, such as living benefit riders.
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