A newly-completed Cerulli study shows that a quarter of advisors are unwilling to recommend rolling accumulated savings into annuities, despite the advantages they sometimes offer. Lisa Plotnick, senior analyst, said Cerulli hopes to see that change as advisors learn more about annuities and annuities shed their bad reputation. "Annuities have been getting a bad rap because of fees," she said. "A lot of people don't understand the fees that comprise an annuity." On the bright side for annuities, she said, about 40% of surveyed advisors would recommend annuities to their clients.

One reason many advisors shun annuities, besides the relative complexity of fees, Plotnick said, is that both annuities and IRAs are tax-deferred vehicles. The reaction of many advisors to annuities is to ask why they should put one tax-deferred vehicle inside another. But that doesn't take into account differing tax situations, she noted. One thing the study did not do was check the relative wealth of the advisor's clients against what advisors were likely to recommend. But Cerulli did look at how much planning the advisor engages in and found that the more planning work in the advisor's business, the more likely they were to advise clients to use annuities.

Plotnick said yet another reason advisors balk at annuities is a lack of familiarity with the product. She noted that minimum guaranteed withdrawal benefits, for example, did not exist a decade ago.