Former SEC Chief To NAVA: More Meaningful Disclosure
By
Boston
Its time for the variable annuity community "to take the steps necessary to implement fuller and more meaningful disclosure."
With those words, Arthur Levitt, former chairman of the Securities and Exchange Commission urged members of the National Association for Variable Annuities to "adopt a clear-cut, simple-to-understand fee statement on any variable product."
The call came during an address Levitt gave here at NAVAs annual meeting. It was an address in which he urged the financial services industry to take several proactive steps to ensure the strength and security of the capital markets during this slowing economy and era of terrorist threat.
One of those steps he said is to "not falter in our efforts to make our markets as transparent and open as possible."
This means ensuring "full and fair disclosure in all parts of the securities industry," he continued, forwarding a message he propounded throughout his SEC tenure from July 1993 to February 2001.
In applying his disclosure message to VAs, Levitt did allow that VAs offer "an attractive savings vehicle for some investors."
But he also contended "many of the touted benefits of VAs are modest for many investors," and said some people believe the VA industry has "oversold the benefits and obscured the costs of VAsburying fees in hundreds of pages of documents."
It is to counter that criticism that he said he is urging NAVA members to adopt simple-to-understand VA statements. These "should show, in simple terms, the annualized cost of the product, along with the accumulated cost, if premiums were paid over a lifetime," he said.
Doing so will become especially important in the months ahead, he maintained, as annuities may take center stage in discussions on Social Security reform.
