Only half of Consumers Read Their Current Prospectus

WASHINGTON, D.C. -- An exclusive Insured Retirement Institute (IRI) survey released today found that nearly 9 out of 10 consumers would be more likely to read their prospectus if provided in short summary form rather than the full detail. The survey also found that only half of consumers read the prospectuses currently provided with their investments, with only about 20% saying they always do.

"It is clear that investors are looking for comprehensive and concise information that will help guide them through a critical part of their retirement planning process," said IRI President and CEO Cathy Weatherford. "IRI's survey clearly demonstrates that 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. We look forward to our continued work with our members and the SEC to help improve the information available to the millions of Americans who rely on variable annuities as an important part of their retirement program."

IRI has been working on efforts for a VA summary prospectus for some time. In December, 2008, IRI developed and submitted to the U.S. Securities and Exchange Commission (SEC) a Draft Summary Prospectus Rulemaking Petition. IRI subsequently met with the SEC on several occasions to help advance its consideration of a summary prospectus for variable annuity products. 

Late last year, Andrew J. "Buddy" Donohue, Director of the Division of Investment Management at the SEC, publicly recognized IRI's leadership in developing a variable annuity summary prospectus proposal and stated that it is time for a summary prospectus for variable annuities. Shortly thereafter, SEC Chairman Mary Schapiro confirmed her staff was developing a long-overdue and much-anticipated variable annuity summary prospectus. IRI is currently working with its members to draft VA summary prospectus models for consideration and review by the SEC.

The full survey findings include:

• Only half - fewer than three out of five (56%) - read the prospectuses provided with their investments (sometimes or always), with only one-fifth (21%) saying they always do.
• The vast majority (86%) would prefer a shorter paper summary prospectus instead of the full detail, if details were available online or upon request.
• The vast majority (89%) also would be more likely to read their prospectus if provided in short summary form rather than the full detail.
• The top three most important pieces of information to include in a prospectus are: fees, returns and risks.

The IRI Survey was conducted by Cogent Research, a value-added market research and strategic consulting firm. The findings are based on a survey of 961 retirees and pre-retirees with at least $100,000 in investable assets, including workplace plans but excluding real estate. For more information about Cogent Research, please visit www.CogentResearch.com

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is a not-for-profit organization and is the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella. IRI's mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and to advocate before public policy makers on critical issues affecting insured retirement strategies. Visit www.IRIonline.org to experience the new, vast resources of the new Insured Retirement Institute for yourself.

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