Legislation has been introduced in the House that will direct the Securities and Exchange Commission (SEC) to design a tailored form for disclosures relating to a Registered Index Linked Annuity (RILA). This bill will help to ensure that investors who consider purchasing a RILA will get the information they need to make a sound investment decision and that the information is presented in a way that promotes investor understanding. CFA sent a letter of support for the Registered Index Linked Annuities Act (H.R. 4865) to House sponsors Rep. Alma Adams (D-NC), Rep. Anthony Gonzalez (D-OH), and Rep. Dean Phillips (D-MN).
“RILA sales have grown rapidly in recent years, with $9.2 billion in sales reported in just the first quarter of 2021. Currently, however, the lack of a tailored form for registering the products with the Securities and Exchange Commission (SEC) can result in disclosures that are long, dense, and incomprehensible to the typical purchaser. By directing the SEC to develop a tailored RILA registration form, your bill should help to ensure that disclosures are more focused on the information investors need to determine whether the product represents a good option for them,” the letter states. Additionally, the letter also emphasizes that “the bill requires the SEC to engage in investor testing and incorporate results of that testing in the design of the form, with the goal of ensuring that key information is conveyed in terms that purchasers are able to understand.” The letter concludes, “[b]ecause this legislation offers a model for how disclosures can and should be designed with the needs of investors in mind, CFA is pleased to offer it our strong support.”