In a report released late last month, the Insured Retirement Institute
(IRI) announced that seven out of ten investors surveyed admitted they
seldom or never read the prospectuses that accompany variable annuities.
At 100 to 300 pages long, that doesn't come as a surprise.
A long, difficult-to-understand prospectus is a plus for sellers. As evidenced
by the IRI report, it means most investors won't read it. (According
to the IRI, only 5 percent of surveyed investors said they always read
their prospectuses.) And, even if they do read it, they're unlikely
to discuss the product with their advisers.
More investors than ever before (94 percent compared to 86 percent last
year) are saying they would like to receive a shorter, printed summary
prospectus instead of a full-length prospectus.
"Consumers are looking for clear and concise information when making
investment decisions, particularly when it comes to strategies that may
be a bit more intricate," said IRI President and CEO Cathy Weatherford.
"Our research shows that the vast majority of investors completely
forgo reading their full prospectus, because of its length or other consumer
preferences. At a time when consumer reliance on insured retirement strategies
is growing, we need to ensure that investors have access to the kind of
product information they are seeking, in a format that reflects their