Most Investors Ignore Prospectus for Variable Annuities, Reports IRI

According to the Insured Retirement Institute, the majority of consumers don’t read the prospectus that accompanies a variable annuity purchase. IRI, which issued its report last week, also found that:

• 94% of consumers would like to get a prospectus summary that is shorter and is available either online or per their request. Most variable annuity prospectuses are 100 to 300 pages long.
• 59% of consumers said they would more likely discuss the product with their investment adviser if they were given a prospectus that was shorter and easier to understand.
• 78% of those surveyed say they rarely or never read their prospectuses.
• 5% said they always read their prospectuses.
• 87% of annuity contract owners hardly ever look at their prospectuses when they have questions about their purchase.
• Information about expenses and fees and the summary/highlights section are the parts of the prospectus that customers are most likely to read.
• 88% of respondents read the parts of the prospectuses that report on account deductions (commissions, sales loads).
• 59% of variable annuity owners look at the section on contract benefits.
• 6% read the death benefits section.

Following the release of the IRI’s report, FINRA CEO and Chairman Robert Ketchum spoke at the Insured Retirement Institute Government, Legal, and Regulatory Conference about the importance of moving away from account statements that are so packed with information that investors end up not reading the document.

Our stockbroker fraud lawyers are here to recoup our clients’ investment losses caused by securities. Contact Shepherd Smith Edwards & Kantas LTD LLP today.

Related Web Resources:

Read the IRI Report (PDF)

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