Donohue Wants Summary Prospectus for Variable Products and Rules on Target Date Fund Marketing
In a recent speech, Andrew Donohue, the SEC’s Director of the Division of Investment Management, recommended changes to disclosure and marketing materials for variable insurance products and target date funds. Mr. Donohue said that the SEC is considering a proposal for a summary prospectus for variable insurance products similar to the regime recently adopted for mutual funds. Mr. Donohue also said that the SEC is considering additional rules governing the names and marketing materials for target date funds. He said that the Division of Investment Management is “concerned that target date marketing messages be balanced and that they not suggest a uniformity or simplicity of target date funds where these are not present.”
OUR TAKE: The idea of a variable insurance product point-of-sale disclosure document has been suggested many times. The mutual fund summary prospectus would be a good framework. With respect to the marketing of target date funds, the SEC has rarely offered specific guidance on fund marketing materials, so any guidance would be helpful. We expect FINRA to weight in on these marketing issues as well.