RAND researchers fielded the survey through the American Life Panel, a nationally representative panel of more than 6,000 participants who are regularly interviewed over the internet. About 90% of respondents on the panel said they would click hyperlinks to get additional information on fees if they were provided. Said one survey respondent: “You know, if you’re price comparing, if you’re on Amazon … you’re going to be looking at the specific price you’re paying.”
Knut Rostad, president of the Institute for the Fiduciary Standard, said investors are overwhelmed by the number of various types of fees and how financial reps are paid.
Indeed, there are numerous instances in the survey findings where investors’ liking a section of the summary did not correspond to understanding what it would mean. Almost half of survey respondents found the “Our Obligations to You” legal section of the summary to be “just right” in terms of ease in understanding, while less than one-third of investors named it an important section and 23 percent said it was very difficult to understand.
“If the commission is going to make good use of this research—and there’s a lot of valuable information here—they will need to focus on the actual evidence of investor understanding, or lack thereof, and not just pat themselves on the back because investors appear to ‘like’ the documents,” Roper said.
“The clear implication of the research is that the SEC still has a lot of work to do if it wants to rely on disclosure to dispel investor confusion and support informed decision-making,” she added.
The SEC has given interested parties until December 7 to comment on the new survey findings.