Drilling down, fixed annuity sales fell 12.5% for the quarter year over year, while variable annuity sales declined 17.5% from the third quarter of the preceding year.

But the news isn’t all doom and gloom.

“Fixed and fixed-indexed annuity sales remain near historic highs,” said Frank O’Connor, IRI’s vice president of research and outreach, by e-mail. He added that the sale of “buffer” annuities (index-linked products that cap both losses and gains) and fee-based annuities, while currently small, were growing.

The sales decline has many explanations. In a press release, IRI President and CEO Cathy Weatherford attributed it to “an uncertain regulatory environment,” pointing specifically to the partial implementation of the U.S. Department of Labor’s fiduciary rule.

Steve Kaufman, editor of Annuity FYI, an online informational resource for prospective annuity buyers, says “Sales have been declining because the quality of some types of annuities, especially variable annuities, have deteriorated in recent years. Exposure to equity subaccounts has been reduced and, in general, fewer such offerings are available. … An additional factor, no doubt, has been the soaring stock market.”

Though variable annuities allow for a degree of equity market participation, they come with higher fees than direct investments. “In addition, many annuity purchases made as a result of the last market downturn have not kept pace with market returns,” says Judson Forner, a vice president at Akron, Ohio-based ValMark Financial Group.

But could the industry itself be at least partly to blame? “The industry has played its cards wrong,” posits Stan Haithcock, the Ponte Vedra Beach, Fla.-based expert known as “Stan The Annuity Man.” Specifically, he faults the industry for misrepresenting annuities as market-growth alternatives, which he calls a “false promise,” instead of making plain that they are contractually guaranteed transfer-of-risk products. “The industry should educate the public on the unique benefit proposition of lifetime income that only annuities can offer,” Haithcock stresses. “Consumers are smart enough to know that if they want real market growth, an annuity of any type is not the answer. So this is a huge branding blunder, which the industry keeps making year after year.”

Still, providers of annuities shouldn’t give up hope. One reason: Stocks may very well be approaching a bubble. “Annuities are designed to protect the client from market volatility,” says Jim Richards, managing partner at Annexus Ventures, a provider of capital and support to fintech companies. “Participation annuities remain a safe haven for clients who want to protect their assets from market risk while retaining the potential for growth.”