VA summary prospectus model on its way

Though no target date has been set, the SEC appears to be inching closer to formulating rules for a summary prospectus for variable annuities.

At the Investment Management Institute 2013 conference held last week in New York City, David W. Grim, deputy director, division of investment management, spoke on behalf of Norm Champ, director of the division. Grim’s remarks were later published on the SEC website.

His speech detailed a list of short- and long-term goals for the agency. On the longer-term agenda were guidelines for a summary prospectus for variable annuities (VAs), similar to what the SEC adopted several years ago for mutual funds. Grim stated that the agency “is beginning work on a rule” on a streamlined summary prospectus for VAs.

Grim noted that VAs can be challenging for consumers to comprehend due to the complexity of the benefits, costs and assortment of investment options. “These and other factors often result in disclosure that is long and difficult to understand,” he stated. “Our goal is to facilitate the communication of concise, user-friendly information to investors considering variable annuities and enhance the transparency of the benefits, risks and costs of these products.”

In a simplified summary prospectus for mutual funds, consumers can easily ascertain key information about fund investment objectives and strategies, risks and fees. It also provides a “click through” or request feature if a consumer wants more detail, Grim said.