In a dramatic re-branding, NAVA Inc., the trade group of variable annuity providers, last week changed its name to the Insured Retirement Institute and its focus to serving “the insured-retirement-strategies industry and consumers who rely on those guarantees.”
The name change is the latest chapter in the organization's make-over, which has included bringing in new top management and moving its headquarters from Reston, Va., to Washington.
The group will target broker-dealers and their advisers through webcasts and news-letters, as well as investors, whom it will reach through consumer brochures ap-proved by the Financial Industry Regulatory Authority Inc.
Consumer advocates and financial advisers are open to the change, yet skeptical of the group's new focus.
“Being that it's an industry organization, I hope they would reflect the interests of all of the industry members, including the low-cost pro-viders that consumers may consider,” said Timothy M. Hayes, founder and president of Landmark Financial Advisory Services LLC in Pittsford, N.Y. “I'm naturally skeptical, but not overly cynical.”
Although trade associations often provide information to consumers, the public should be aware that such groups do work on behalf of their constituents, said Birny Birnbaum, consumer advocate and executive director of the Center for Economic Justice in Austin, Texas.
“It's important for consumers to be aware that the information they get isn't from a neutral or objective source but from a trade,” he said.
A recently released one-and-one-half-page consumer brief from the institute, “Consumer Tips: Annual Annuity Withdrawals,” told clients to visit their advisers before withdrawing cash from an annuity, warned of surrender charges and encouraged annuity holders to make withdrawals only when they are within their annual percentage limits.
The institute ought to identify itself as a trade group in the consumer brief, Mr. Birnbaum said.
REGULATOR INPUT
Still, the group could strive for objectivity by creating an independent advisory board comprising consumer representatives and product experts — not industry members — to certify the information distributed to clients, he said.
Mr. Birnbaum was also skeptical of how much state insurance regulators or Finra of New York and Washington could bring to the table in terms of input on the brochures.
“State insurance regulators need to do a lot more in terms of developing objective consumer disclosures,” he said. “I think a lot of the same holds true for Finra.”
In response, Danielle Holland, a spokeswoman for the institute, wrote in an e-mail: “The effectiveness of consumer education efforts is truly in the eye of the beholder. There isn't one "brochure' that will be useful to everyone considering an insured retirement solution.”
The institute's new adviser materials will roll out this fall, with -content focusing on regulatory compliance matters, according to Cathy Weatherford, its president and chief executive.
“It's slow, and we sure can't do it all at once,” she said of the revamping efforts in an interview. “But we keep building out materials to ensure advisers have good factual information on any number of topics and subjects as they arise.”
Advisers pointed out that consumer advocacy begins with finding a way to make brokers and agents understand the nuances of the annuities.
“I think more information to these agents who are selling the annuities without having a thorough knowledge of them — that would be protecting the public,” Bob Straka, president of GrandView Financial Group LLC in Birmingham, Ala.
E-mail Darla Mercado at [email protected].
