August 30, 2012
--- The Securities and Exchange Commission (SEC) has
completed a study about investors mandated by the 2010 Dodd-Frank Wall Street
Reform and Consumer Protection Act. ---
The staff study includes findings
about what investors want to know about financial professionals, and investment
products and services, and when and how they want to receive such information. Investor
perceptions and preferences regarding a variety of investment disclosures are
identified.
Investors prefer to receive
investment disclosures before, rather than after investing, as occurs with many
investment products purchased today, the study found. Information that
investors find useful and relevant in helping them make informed decisions
includes information about fees, investment objectives, performance, strategy
and risks of an investment product, as well as the professional background,
disciplinary history and conflicts of interest of a financial
professional.
Investors also favor investment
disclosures presented in a visual format, using bullets, charts and
graphs.
“From methods to improve disclosures
to best practices for investor education programs, the study addresses a wide
range of areas related to investor literacy,” said Lori J. Schock, director of
the SEC’s office of investor education and advocacy. “It is a ‘must read’ for
any individual or organization dedicated to educating investors.”
The study draws from numerous
sources, including online survey research, focus group research, public
comments to the SEC and a Library of Congress review of studies of financial
literacy among U.S. retail investors.
The report can be accessed here.
PLANADVISER staff