Seniors Say Short is Sweet with Investment Prospectuses

When it comes to reading, most affluent seniors don’t want to snuggle up with a lengthy description of their investments, a new survey suggests.

A little more than half of retirees and pre-retirees with $100,000 or more in investable assets read their fund prospectuses, and only about one-fifth “always” read them, according to a survey released by the Insured Retirement Institute (IRI).

The survey, conducted by Cogent Research, also found that nearly nine out of 10 respondents said they would be more likely to read their prospectus if it was provided in short summary form rather than full detail. The vast majority (86%) would prefer a shorter paper summary prospectus instead of the full detail, if details were available online or upon request.

Seniors put cost ahead of performance when ranking the information to include in a prospectus. Fees were listed as the most important piece of information to include (89%), followed by returns (76%), risks (63%), and tax advantages (61%).

Last year the Securities and Exchange Commission (SEC) implemented a rule requiring mutual funds to provide a summary prospectus (see “SEC To Require Mutual Fund Summaries”). IRI is advocating for the SEC to also require a summary prospectus for variable annuity products. “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,” said IRI President and CEO Cathy Weatherford, in a release of the survey results.

The findings are based on an online survey of 961 retirees and pre-retirees (within seven years of retirement) aged 55 and older with at least $100,000 in investable assets, including workplace plans but excluding real estate.