The Majority of Investors are Flying Blind

In a National Underwriter's article recently, some surprising results were listed from a survey to determine how well informed the typical investor is about his investments. The Securities Investor Protection Corp., Washington, and the Investor Protection Trust, also from Washington, conducted the survey in November of this year among 927 U.S. investors. Some of the more interesting statistics were that only 61% of the participants understand that stock brokers and financial planners receive commissions on product sales. A whopping 64% of those surveyed had not bothered to check into the disciplinary backgrounds of their stockbrokers or financial planners and 61% of this group who did not do background investigation chose not to do so because they trusted the individual. Another 9% did not check out their broker or advisor because the advisor assured them that there was nothing for them to be concerned about. One of the more shocking numbers is that only 8% of participants understand that their portfolio is not insured from investment fraud. And finally, one number that is not surprising is that only 58% of the respondents had ever read a prospectus. With the recent uproar by the securities industry about the lack of proper sales methods used with indexed annuities, it seems that these figures show that there is much work they need to be doing in their own house, in order to improve their own sales methods for securities products to better inform and protect their own investor clients.