The Insured Retirement Institute is applauding the confirmation from Securities and Exchange Commission Chairman Mary Schapiro that her staff is developing a variable annuity summary prospectus. IRI has long called for—and officially petitioned—the SEC to develop such a document to advance the interests of the investing public, and to reduce the burden placed on its members, which includes insurers, to produce lengthy documents that consumers traditionally ignore because of their complexity.
In a speech during the Consumer Federation of America’s 21st Annual Financial Services Conference in Washington, Schapiro said SEC staff is “developing a simplified summary prospectus for variable annuities, which are widely regarded as one of the most difficult-to-understand products on the market. It is precisely in this type of product where simplicity of disclosure is essential,” she said. “At the end of the day, our investor in that Main Street office just wants to know the facts, so he is not taken advantage of by hidden fees or questionable motivations. And he needs this information when it is most meaningful—at the time he is making his investment decision.”
IRI says Schapiro’s comments come less than a month after Andrew J. “Buddy” Donohue, SEC director of the division of Investment Management, publicly recognized the leadership of the IRI for its efforts to help simplify prospectus language for consumers.
“We are very pleased Chairman Schapiro has confirmed the SEC is moving forward on something that will mean so much for consumers,” says Cathy Weatherford, president and CEO of IRI. “This long-overdue and much-anticipated summary prospectus will give consumers easy-to-understand language without a mountain of jargon to pore through. Investors most often find a prospectus to be lengthy and confusing—and unfortunately then choose to forgo reading the materials completely. By reducing the length of the information and presenting it in a more consumer-friendly format, investors will have a better opportunity to become more informed about an insured retirement strategy.”