The claim is a fixture of the retirement seminar circuit: annuities, a salesperson tells a roomful of retirees over a free dinner, can outperform the market. MarketWatch put that specific pitch under scrutiny in a June 2026 piece, and the answer — predictably — depends entirely on which product is being sold and what "outperform" is allowed to mean.

The annuity universe is not monolithic. Fixed annuities offer a contractually guaranteed crediting rate; the insurer absorbs investment risk entirely. Variable annuities allocate premiums into subaccounts — effectively mutual funds held inside an insurance wrapper — so the policyholder bears market risk directly. Registered index-linked annuities (RILAs), the fastest-growing segment over the past several years, split the difference: returns are tied to an index like the S&P 500 up to a cap or participation rate, with downside losses buffered or floored. Each structure implies a different risk-return profile, and conflating them is exactly what a seminar pitch is designed to exploit.

On the pure return question, variable annuities invest in the same underlying equities as low-cost index funds, so gross returns before fees are comparable. The drag is the wrapper itself. Mortality and expense charges typically run 1.0–1.5% annually; optional guaranteed living benefit riders — the main selling point in the retirement context — add another 0.5–1.0% or more. Total all-in costs of 2.5–3.5% annually are common. At that drag, a variable annuity must generate sustained alpha inside its subaccounts just to keep pace with a plain vanilla equity index fund — an outcome that the empirical literature on active management makes systematically unlikely over full market cycles.

RILAs are more nuanced. The buffer or floor is real and has actuarial value, particularly for sequence-of-returns risk in early retirement. But the cost of that protection is the cap or participation rate: an investor in a RILA tied to the S&P 500 with a 20% buffer and a 15% annual cap captures less than the full upside in strong years. Whether that trade is favorable depends on realized volatility, the specific terms at contract inception, and the policyholder's actual spending trajectory. That is not a calculation a seminar pitch makes, because the answer is genuinely uncertain ex ante.

The regulatory architecture matters here. Variable annuities and RILAs are classified as securities and fall under dual SEC and state insurance commissioner oversight, as FINRA notes — meaning the broker selling them must be registered and is subject to suitability or best-interest standards. Fixed indexed annuities, by contrast, are insurance products only, sold by state-licensed insurance agents who are not held to the same federal securities framework. The steak-dinner format is almost exclusively the domain of the fixed and fixed-indexed product, where regulatory friction for the seller is lower.

The compensation structure is the other half of the story. Variable annuities historically generate some of the highest commission payouts in the retail distribution system — a dynamic Reuters documented as far back as 2014, alongside the compliance burden that commissions of that magnitude attract. Fixed-indexed annuity commissions can run 5–8% of premium upfront, embedded invisibly in the product's terms rather than disclosed as a line-item charge. That structure is not inherently fraudulent, but it creates an incentive for the salesperson to present the product's upside scenarios rather than its full distribution of outcomes.

The demand side is genuine. The appetite for principal protection with some market participation has deep roots — AXA was explicitly targeting that preference in the UK market as early as 2008, and the same behavioral dynamic drives RILA growth in the US today. Sequence-of-returns risk is real and asymmetric for retirees drawing down assets; a guaranteed floor has legitimate portfolio utility that a raw expected-return comparison understates.

The honest version of the seminar pitch would sound less compelling: certain annuity structures can reduce left-tail risk in retirement, in exchange for capped upside and layered costs that reduce expected terminal wealth relative to a diversified equity portfolio. That is a defensible value proposition for a specific cohort of retirees — those highly sensitive to early drawdowns — but it is not "outperform the market." The gap between those two framings is where the compliance risk, and the consumer harm, lives.