7 Facts About the New Variable Product Summary Prospectus Regs

2. The People

The contact people listed in the introduction, in the full regulatory packet, are Daniel Chang, Pamela Ellis, Bradley Gude, James Maclean, Amy Miller, Michael Pawluk, Harry Eisenstein and Michael Kosoff.

3. The Length

Making the guides to the variable products shorter and simpler is not simple: The regulatory packet takes up 713 pages.

The sample instructions for the N-4 variable annuity registration form takes up 47 pages, and the sample instructions for the N-6 variable life policy registration form takes up 48 pages.

4. Gotchas

As much as IRI likes the idea of the new summary prospectus, Berkowitz noted in his statement that IRI is still going through the final regulations to see what it thinks.

5. The Key Information

Here are the major categories of information in the list of "Important Information You Should Consider About the [Contract].":

• Fees and expenses
• Risks
• Restrictions
• Taxes
• Conflicts of interest

6. Financial Professional Compensation

The final regulations put "Investment professional compensation" in the "conflicts of interest" section.

Here are the instructions given for that item:

State that some investment professionals may receive compensation for selling the contract to investors, and briefly describe the basis upon which such compensation is typically paid (e.g., commissions, revenue sharing, compensation from affiliates and third parties). State that these investment professionals may have a financial incentive to offer or recommend the contract over another investment.

7. Debate Over the Financial Professional Compensation Item

The SEC notes in the introduction to the final regulations that some commenters on the draft version wanted to expand the scope of the conflicts of interest section, and that other commenters wanted to narrow it.

"We are adopting this line-item as proposed," SEC officials write. "The variable contract summary prospectus conflict of interest disclosures were modeled on the parallel requirement for mutual fund summary prospectuses. Based on our experience with the mutual fund summary prospectus regime we believe the required disclosure strikes the right balance of alerting investors to certain conflicts in a summary document, while accommodating additional detail that may be described in the statutory prospectus."

— Read 5 IRI Priorities That Could Help Your Annuity Sales, on ThinkAdvisor.

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