"Investor Survivor Skills Survey" by Opinion Research Corporation

8/14/2019 "Investor Survivor Skills Survey" by Opinion Research Corporation

1/49

Founded1938

InvestorSurvivalSki

llsSurve

y

InvestorSurvivalSkillsSurve

y

Preparedfor

Preparedby

AnE

xaminationofInvestorKnowledgeandBehavio

r

AnE

xaminationofInvestorKnowledgeandBehavio

r

December13,

2005

SecuritiesInvestorProtectio

nCorporationandInvestorProtectionTrust


2/49

2

InvestorSurvivalSkills

TABLE

OFCONT

ENTS

TABLE

OFCONTENTS

Page

METHODOLOGY................................................................................................................................................

3

EXECUT

IVESUMMARY...................................................................................................................................

4

DETAILEDFINDINGS.....................................................................................................................................

10

APPEND

IX.........................................................................................................................................................

45

Questi

onnaire


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Execu

tiveSummary

Execu

tiveSummary

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4


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5


Executive

Summary

Executive

Summary

Thevastm

ajorityofAmeric

aninvestorsdonotappeartopossessthe

basicinvestorsurvivalsk

illsneededtobuildtheirsavingsintoa

retirement

nestegg.

A

SecuritiesInvestorProtectionCo

rporation

(SIPC)/InvestorProtection

Trust(IPT)surv

eyconductedby

Opinion

Research

Corporation(ORC)gaugedtheknowledgeandbe

haviorof

investorsw

hoeithermanag

edtheirownaccountsorrelyupon

financial

professionalstodoso.

KeySIPC/IPT

findingsincluded

thefollowing:

Morethan

fouroutoffiveinvestors(83%)flunkedtheoveralltestofkey

knowledge

andbehavior.O

nly17%ofrespo

ndentscorrectlyanswered

a

sufficien

tnumberofquestionson

knowledge

(sixout

ofeight

questions)

andbehavior(threeoutoffourquestions).Wom

enwere

substantiallymorelikelytha

nmentofailthe

overalltestbyamarginof

91%to77%.


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6


Executive

Summary

Executive

Summary

Twoofthe

handfulofbrightspotsinthes

urveyfindingshavetodo

withaccou

ntstatementsanddiversification.

Onthe

behaviorside:90%

oftheinvestors

saidthattheyregularlyread

theirbrokerageaccountan

d/ormutualfundstatements.Only9%

indicated

thattheydidnotdoso.Anumberoforganiza

tionsincludingSIPChave

placedamajoremphasis

ontheneedforinvestorstoprotectthemselves

byrevie

wingtheiraccountstatementsindetail.

On

the

knowledge

side:nearly

threeoutoffourinvestors

(74%)

demons

tratedthattheyunderstandtheconceptofdiversification,

whichhas

beena

majorfocusofinve

storeducationeffo

rtsbytheInvestor

Protection

Trustandothergroups.

Otherkey

investorbehaviorfindings:

Few

erthanthreeoutoffive

investors

(58%)said

thatthey

haveeverread

aprospectus.

Additionally,morethanthreeoutoffourin

vestors(77%)claimedto

haveafina

ncialplanofsom

esortinplace.


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7


Executive

Summary

Executive

Summary

Oneinfiv

einvestors(21%

)saidthattheypracticeallfourofthe

desirable

behavioraltraits

focused

on

in

the

survey:

reading

prospectuses,regularlyreviewingaccountstatements,checkingoutthe

disciplinarybackgroundsofbrokers/financia

lplanners,and

havinga

financialplaninplace.

Oneinfourinvestorsprov

idedenoughcorrectanswersto

passthe

knowledge

portionofthe

surveytest.O

nly1%

ofthe

investors

answered

alleightquestionscorrectly.

Fewerthenthreeinfive

investors(57%)providedasufficientnumber

ofcorrectanswerstopass

thebehaviorsideofthesurvey.

Mostdistu

rbingresultonbehavior:

Onlyslightlymoretha

nathird

(36%)ofinvestorshavech

eckedoutthedisciplinarybackgroundsof

theirstockbrokerand

or

financialplanne

r.

Perhapsev

en

more

disturbingly,sevenoutof10

thosewhodidn

otcheckouttheirfinancial

plannersbackgroundindic

atedthattheydidsoeitherbeca

usethey

trustedthe

individualinquestion(61%)ortheindividualhad

assured

themthattherewasnothing

tobeconcerned

about(9%).


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8


Executive

Summary

Executive

Summary

Mostdistu

rbingresultsontheknowledgeside:Fewerthanonein10

investors(8%)understandt

hatNOagencyororganizationinsuresyou

againstlos

ingmoneyasthe

resultoffraudin

yourinvestmentportfolio.

Atotalo

ffouroutfiveinvestorsincorrectlyidentifiedoneorm

oreofthe

followingentitiesasprovidingsuchinsurance:

SecuritiesandExchangeCommission(42percent)

FederalDepositInsuranceCorporation(41perc

ent)

SIPC(23percent)

Anotherindicationoftheweakstateofinvestorknowledge

:Fewer

thantwo

infiveinvestors

(39%)understandhow

salesfeesand

commissio

nsworkintheno-loadmutualfun

dcontext.Anea

rlyequal

numberof

investors(38%)

answeredtheno-loadquestionincorrectly

andanoth

er12%

eitherindicatedtheydid

notknow

orrefusedto

providean

answer.


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9


Executive

Summary

Executive

Summary

Otherkey

investorknowledgefindings:Only

41%understand

thebond

investingb

asicrulethatasinterestratesgou

p,bondpriceste

ndtofall.

Morethan

aquarterofinvestors(28%)predictedbondswillmoveinthe

wrongdire

ction,16%

said

bondpriceswouldremainthesame,and

14%eitherdidntknoworre

fusedtoanswer.

Fewertha

n

three

in

five

investors(57%)can

correctly

define

a

prospectus.

Aboutthre

eoutoffiveinvestors(61%)und

erstandthatmos

tbrokers

and

financialplannersare

compensated

through

commis

sionson

productssales.

Twoouto

fthreeinvestors

understandthat

stockshavehad

thebest

long-term

returnforinves

tors,compared

tothosewhoincorrectly

identifiedC

Ds(14%),bonds

(11%)andsavin

gsaccounts(2%).


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iledFinding

s

Deta

iledFinding

s

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10


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11


AProfileofInvestors

AProfileofInvestors

Asascre

eningquestion,

allrespondents

wereaskediftheyown

securities,

whichweredefinedasmutualfund

s,stocksorbond

s.Forty-

sixpercen

tofallrespondentssaidtheydoownoneormore

ofthese

securities.

Theyareconsideredinvestorsforthepurpose

softhis

study.

Menareslightlymorelikelythanwomentosaytheyareaninve

stor(50%

vs.43%

.)

Theyoungestrespondents

aged18-24years

ofagearethelea

stlikelyto

beinve

stors(11%).More

thanhalf(54%)of

thoseaged35-64

ownsome

securitiesandareinvestors.

Thehig

hertheeducationlevelandtheincom

elevelofthehous

ehold,the

morelikelytheresponden

tistobeaninves

tor.Only17%

of

thosewith

lesstha

n$25,000inhouseholdincomearein

vestorscompared

to73%

of

thosew

ithincomesof$75,000ormore.Similarly,only17%on

thosewith

lesstha

nahighschooleducationareinvestorscomparedto66%

ofthose

withac

ollegedegree.


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12


AProfileofInvestors

AProfileofInvestors

46%

50%

3%

Yes

NoDon'tknow

Base:Totalrespondents.

QA1:Areyouaninvestor,t

hatis,doyouownsecuritiessuchasmutualfunds,stocks,bon

ds,e

tc.?


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13


TypesofS

ecuritiesHeld

TypesofS

ecuritiesHeld

Noonefor

mofinvestingispreferredoveranother.Slightlymo

rethana

third(37%

)investthrough

aretirementpla

n,28%

investd

irectlyor

throughabroker,planneror

advisor,and31%

doboth.

Investorsinhouseholdsw

ithlessthan$35,000inincometendtoinvest

themselvesorthrougha

broker,planneror

advisor(44%).T

hosewith

householdincomesof$35

,000tolessthan$50,000tendtoinve

stthrough

aretirementplan(50%)andthosewith$75,000ormorein

household

income

tendtoinvestusing

boththesemethods(44%).


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14


TypesofS

ecuritiesHe

ld

TypesofS

ecuritiesHe

ld

28%

37%

31%

3%

0%

20%

40%

Directlyorthrough

broker,adviso

r,planner

Throughretirementplan

Both

Don'tknow

QA2:Doyouinvestdirectlyorthrougharetirementplan?

Wouldyousayyouinvestdirectlyyourselforthroughabrokerorfinancialplannero

investmentadvisor,in

vestthrougharetirementplan,orboth?

Base:Investors,n=927.


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15


Investm

entKnowle

dgeandBehavior

Investm

entKnowle

dgeandBehavior

Thissurve

yaskedeightinvestmentknowledgequestions

andfour

investmentbehaviorquestions.Theanswersgivenweregradedand

responden

tsweregivenapassingorfailings

core.

Only17%

ofinvestorswhoinvestdirectly

withabroker,a

dvisoror

financialp

lannergetapassingscore.

To

earnapassing

score,a

responden

thastoanswer

sixoftheeight

knowledgequestionsand

threeofthefourbehaviorqu

estionscorrectly.

Menarealotmorelikelythanwomentorece

iveapassingscore

(23%

vs.

9%).

Thosea

ged45-54alsoare

alotmorelikelyto

getapassingscore(24%).

Respon

dentswithhouseholdincomesof$75

,000ormore(24%

)orthose

withac

ollegedegree(23%

)arealsomorelike

lytopass.

Amongthe

eightknowledgequestions,theaveragenumberofcorrect

answersw

as4.2.Forthe

behaviorquestionstheaverage

was2.6.

Onlyafou

rthansweredeno

ughknowledgeq

uestionscorrectlytogeta

passingsc

oreand57%ans

weredenoughbehaviorquestions

correctly

topasstha

tpartofthetest.


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entKnowledge

Investm

entKnowledge

March2000

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16


17/49

17


GettingtheBestRateofReturn


Two-thirds

ofinvestors(66

%)whoinvestdirectlythroughabroker,

planneror

advisor,correctly

chosestocksas

theinvestmentin

strument

thatwould

have

offered

the

bestreturn

overthe

last2

5

years.

Fourteenpercentchosece

rtificatesofdepo

sitwhile11%thinkbonds

offerthebestreturn.Only2

%

thinkapassbooksavingsaccountwould

haveofferedthebestreturn

overthelast25years.

Menaremorelikelythanwomentochooses

tocksasthebestinvestment

(75%vs

.56%).

Respon

dentsinhousehold

swithlessthan$3

5,000inannualinc

omewere

lesslikelytopickthecorrectanswer--stock

sthanwerethosemaking

$35,000

ormore(43%vs.72%).

Respon

dentsinsinglepersonhouseholdsare

lesslikelytochos

etheright

answer

thanthoseinhouseholdswiththreeor

more(57%vs.70%

).

Respon

dentswithacolleg

edegreearemore

likelytochosesto

cksasthe

bestinv

estmentthanareth

osewithlessthan

ahighschooleducation(75%

vs.64%

).


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18




66%

14%

11%

2%

7%

0%

2

0%

40%

60%

Stoc

ks

CDs

Bon

ds

SavingsAccou

nt

Don'tknow

QA4:Forthelast25years,whichoneofthefollowinginvestmentsdoyouthinkwouldha

veofferedyouthebestreturnonyourmoney:stocks,

bonds,asavingsaccountorcertificatesofdeposit?

Base:Investorswhoinvest

directlythroughbroker,f

inancialplannerorinvestmentadviso

r,n=550.


19/49

19


WhatisDiversification

WhatisDiversification

Mostinves

torschosetheco

rrectdescriptionofdiversificationfromalist

of

three

choices.

Seventy-four

percent

correctly

identified

diversificationastheprocessoflowering

potentialriskoflossby

spreading

assetsacrossdifferenttypesofinvestments.

Only6%

thinkdiversificationincrease

sapersonscha

ncesofhittingthejackpot,

while4%

thinkdiversification

meansincre

asingcommissio

nsowed

fromownin

gtoomanystock

sormutualfunds

.

Menare

more

likelytha

n

women

to

cho

se

the

rightdescription

of

diversification(80%vs.68%

).

Respon

dentsinhousehold

swith$75,000orm

oreinincomeorth

osewitha

college

degree

(both

83%)are

farmore

likelyto

chosethe

correct

descriptionofdiversificationthanarethose

withlessthan$

25,000in

income

(63%)orlessthan

ahighschooleducation(36%).


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20


WhatisDiversification?

WhatisDiversification?

74%

6%

4%

14%

0%

20%

40%

60%

80%

Lowersthepotential

overa

llrisk

Increasesc

hancesof

hittingj

ackpot

Pushesupcommission

paymentsbyo

wningtoo

manystocksormutual

funds

D

on'tknow

QA5:Diversificationistheprocessbywhichaninvestor.




r,n=550.


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21


NoNo--LoadM

utualFund

s

LoadM

utualFund

s----WhatAreThey?

WhatAreThey?

Investorsarentcertainwha

tthecorrectdefinitionofano-loa

dmutual

fundis.

Aboutfour-in-ten

(39%)correctly

identifieditas

onethat

involvesn

ocommissionorsalescharges

ofanykind.Thirty-eight

percentsa

idthisdescription

wasfalseand23%dontknow.T

hisisthe

firstknowledgequestionwherelessthan50%

gavethecorrectanswer.

Menaremorelikelythanwomentogive

thecorrectanswerforthis

question(45%vs.32%).


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22


NoNo--LoadMutualFund

s

LoadM

utualFund

sWhatAreThey?

WhatAreThey?

39%

38%

23%

True

False

Don'tKnow




r,n=550.

QA6:Ano-loadmutualfu

ndinvolvesnocommissionorsaleschargesofanykind.

Isthis

statementtrueorfalse?


23/49

23


TheRelationshipB

etweenInterestRatesan

dBond

TheRelationshipB

etweenInterestRatesan

dBond

Prices

Prices

Someinve

stors(41%)correctlyunderstand

therelationship

between

interestratesandbondpric

eswellenoughtoknowthatwheninterest

ratesgou

p,bondpricesg

odown.Twenty-eightpercentincorrectly

thinkthatanincreaseininterestratesdrives

bondpricesup.

Sixteen

percentthinkthatbondpric

esremainthesamewheninterestratesgo

up.




Respon

dentsaged45-54arethemostlikely

agegrouptogivethecorrect

answer

(53%).

ThoseintheWest(48%)a

remorelikelythan

respondentsinthe

Northeast

(35%)tocorrectlyidentify

theeffectofrising

interestratesonth

epriceof

bonds.

Respon

dentswithhouseh

oldincomesof$7

5,000ormorearealsothe

mostlik

elytogivethecorrectanswer(52%)

thanarethoseinh

ouseholds

withlessthat$25,000inincome(29%).


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24


TheRelationshipBetw

eenInterestRatesandBond

TheRelationshipBetw

eenInterestRatesandBond

Prices

Prices

14%

28%

41%

16%

Bondpric

es

goup

Bondpric

es

godown

Bondpric

es

staythes

ame

Don'tkno

w




r,n=550.

QA7:Wheninterestratesgoup,w

hatusuallyhappenstothepriceofbonds?Wouldyousay?


25/49

25


TheRo

leofBroker

s,PlannersandAdvisor

s

TheRo

leofBroker

s,PlannersandAdvisors

A

majorityofinvestors(

61%)correctlyunderstand

that

financial

planners,investmentadviso

rsorbrokersare

salespeoplewho

arepaid

indirectre

lationtotheamo

untandtypeofin

vestmentstheys

ell.Only

17%

think

advisorsorplan

nersarepaidba

sedonthequalityofthe

advicetheygiveand11%

thinktheyarepaidonlyiftheirclie

ntmakes

money.

Respon



answer

(68%).

Respon

dentswithhouseh

oldincomesof$7

5,000ormorearealsothe

mostlik

elytogivethecorrectanswer(68%)

thanarethoseinh

ouseholds

with$25,000tolessthan$

35,000inincome(32%).

Thosewith

acollegede

greeare

alsomorelikelytogivethecorrect

answer

(70%)thanarethosewithahighschooldegree(44%).


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26


TheRoleofBrokers,Plannersand

Advisors

TheRoleofBrokers,Plannersand

Advisors

11%

61%

17%

11%

Salespeoplewhoare

paidindirectrelationto

whattheysell

Paidindirectrelationto

thequalityofthe

ir

advice

Onlymakemone

yif

clientdoes

Don'tknow




r,n=550.

QA8:Whichofthefollowingstatementsbestdescribesfull-servicebrokersandmostfinancialplannersorinvestmentadvisors?Mostbrokers

andfinancialplannersare...


27/49

27


WhatisaProspectus?

WhatisaProspectus?

Justoverhalfofinvestors(57%)knowthata

prospectusisananalysis

ofacompanysfinances,

productsandm

anagementthat

ismade

availablew

henthestockis

firstissued.Aboutafourth(29%)

thinkitis

aquarterly

profit/lossstatem

entsenttoallshareholders.




Respon



answer

(66%).

Thoseinhouseholdswith

onlyoneperson(6

4%)andthoseinh

ouseholds

withno

children(61%)are

morelikelytoknowwhataprospectusisthan

householdswithtwoormo

repeoplepresent(55%)orwiththepresenceof

children

(50%).

Respon

dentswithacolle

gedegree(62%)

aremorelikelyto

givethe

correctanswerthanthosewhohavegraduatedhighschool(40%).


28/49

28


WhatisaProspectus?

WhatisaProspectus?

57%

29%

14%

Ananalysisofa

company'sfinan

ces,

productsand

mangementmad

e

availableatstockissue

Quarterlyprofita

ndloss

statementsentto

all

shareholders

Don'tknow




r,n=550.

QA9:Whatdoesthetermprospectusmean?Isit


29/49

29


InsuringIn

vestorsAgainstLossD

uetoFraud

InsuringIn

vestorsAga

instLossDuetoFraud

Mostinvestors(80%)incorrectlybelievetha

tthereissomeinstitution

outtheretoinsurethemagainstlossduetofraudintheirin

vestment

portfolio.

Forty-two

perc

entthink

theS

ecurities

andE

xchange

Commissionistheirinsurer

againlossduet

ofraudand41%

thinkthe

FederalD

epositInsurance

Corporationw

illprotectthem

in

this

instance.

Twenty-three

percentchoose

the

Securities

Investor

Protection

Corporation.Only8%

gavethe

correctresponse

whichis

thatnone

oftheseprotects

investorsagains

tfraudintheirin

vestment

portfolio.



question(11%vs.5%).


30/49

30


InsuringIn

vestorsAgainstLossD

uetoFraud

InsuringIn

vestorsAga

instLossDuetoFraud

42%

41%

23%

8%

11%

0%

20%

40%

60%

SecuritiesandExchange

Commission

FederalDepos

itInsurance

Corporation

SecuritiesInvestor

ProtectionCorporation

None

Don'tknow

QA16:Whichofthefollowingorganizationsinsuresyou

againstlosingmoneyasaresultoffraudinyourinvestmentportfolio?




r,n=550.


31/49

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InvestmentBehav

ior

Invest

mentBehav

ior

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31


32/49

32


MostInve

storsHavea

FinancialP

lan

MostInve

storsHavea

FinancialP

lan

More

than

three-fourths(77%)ofinvesto

rshaveafinan

cialplan

preparede

itherbythemselvesoraprofessio

nal.Aboutafou

rth(23%)

haveyetto

makeupafinan

cialplan.

Respon

dentsinhousehold

swith$75,000orm

oreinincomeare

somewhat

morelik

elytohaveafinan

cialplanthanarethoseinhouseholdswithless

than$25,000inincome(81

%vs.65%.)

Interestinglythereisnodifferenceforthisquestionbygende

r,age,or

presenc

eorabsenceofchildren


33/49

33


MostInve

storsHavea

FinancialP

lan

MostInvestorsHavea

FinancialP

lan

77%

23

%

1%

Yes

NoDon'tknow




r,n=550.

QA3:Doyouhaveaspecificfinancialplanpreparedby

yourselforaprofessional?


34/49

34


Readinga

Prospectus

Readinga

Prospectus

Morethan

half(58%)haveeverreadaprospectusforamutualfundor

stock.Thirty-ninepercenth

avenot.

Menaremorelikelythanw

omentohaveeve

rreadaprospectus(68%

vs.

48%).

Incidenceofreadingapro

spectusisalsoalothigherintheSo

uth(65%)

thanintheNortheast(48%

).

Respon

dentsinhousehold

swith$75,000orm

oreinincomeare

somewhat

morelikelytohavereada

prospectusthanarethoseinhouse

holdswith

lesstha

n$25,000inincom

e(72%vs.47%.)


35/49

35


Readinga

Prospectus

Readinga

Prospectus

58%

39%

3%

Yes

NoDon'tk

now




r,n=550.

QA10:Haveyoueverread

aprospectusforamutualfund

orstock?


36/49

36


Checking

aBrokeror

PlannersDisciplinary

CheckingaBrokerorPlannersDisciplinary

Background

Background

Onlyathird(36%)haveevercheckedthedisciplinarybackgroundof

theirbroke

rorplanner.Halfhaveneverlook

edintothis(54%

)and8%

dontuseaplannerorbroker.Thisisthefirstbehaviorquestionwhere

lessthana

majorityhavereporteddoingthecorrectthing.

ThoseintheSouth(43%)

aremuchmorelike

lytocheckintothe

irbrokers

backgro

undthanarethose

intheMidwest(26%).

Respon

dentsinhousehold

swith$75,000orm

oreinincomeare

somewhat

morelikelyto

have

che

cked

the

brokers

background

than

those

in

householdswith$25,000to

lessthan$35,000

inincome(44%vs.18%.)

Thosewhohavenotcheckedoutabroker

sdisciplinaryba

ckground

saytheytrusttheirbroker

(61%)ortheyd

ontknowhowtogetthe

information

(22%).Ninepercentsaytheirbrokerhastoldthem

thereis

noproblem

intheirbackgroundtocheckout.


37/49

37


Checking

theBrokersBackgroun

d

CheckingtheBrokersBackgroun

d

2%

36%

54%

8%

Yes

NoDon'tusebr

oker

Don'tknow




r,n=550.

QA11:Haveyoucheckedoutthedisciplinarybackgroundofyourbrokerorfinancialplanner?


38/49

38


ReviewingInvestmentAccountStatements

Reviewing

InvestmentAccountStatements

Nearlyall

investors(90%)

reviewtheiracco

untstatementsandother

periodicre

portsabouttheir

investments.O

nly9%

donotreadsuch

statements.

Respon

dentsaged25-34

aretheleastlikelyagegroupto

readtheir

investm

entstatements(80%).

Thosewhodontreviewth

eirstatementsonaregularbasis

givethe

followinga

sreasons:noten

oughtime(38%),relyonothersto

reviewit

(20%),trustyourbrokeror

plannertokeep

ontopofthings

(14%)or

theydontunderstandthestatement(13%).


39/49

39


Reviewing


Reviewing


90%

9%

1%

Yes

NoDon'tknow




r,n=550.

QA13:Doyoureviewyourmutualfundorbrokerageaccountstatementsandtheotherp

eriodicreportsaboutyourinvestments?


40/49

40


TakingInvestmentRisks


Most

investors

understan

d

that

riskis

essentialin

long-term

investmentstobuildanest

egg(69%).Onlyafourth(24%)

saythey

avoidrisks

becausetheycouldendupwithnothingfortheirretirement.

Menar

emorewillingtha

nwomentotake

riskinordertobuildupa

retireme

ntnestegg(73%v

s.65%).

Respon

dentsaged25-34

arethemostlikelyagegrouptoth

inkriskis

necessary,(83%)especiallycomparedtothoseage65orover(5

1%).

Thoseinhouseholdswith$

75,000inincomeo

rmorearemuchm

orewilling

totake

riskstoincreasetheirinvestmentthan

arethoseinhouse

holdswith

$25,000

tolessthan$35,000inincome(82%vs.57%).

Thosewithacollegedegreearealsomore

likelytotalerisks

withtheir

investm

entsthanthosewithonlyahighschoo

leducation(74%vs

.62%).


41/49

41



TakingInvestmentRisks 69

%

24%

7%

Takingrisksis

essentialtobuilda

nestegg

Youavoidtaking

risksbecauseyo

u

couldendupwi

th

nothing

Don'tknow




r,n=550.

QA15:Iwantyoutothin

kaboutriskasitrelatestoinve

stingforyourretirement.Whic

hofthefollowingstatementsbe

stdescribesyourattitu

aboutriskasitrelatestoyourretirementsavings?


42/49

March2000

Founded1938

APPENDIX

APPENDIX

F o u n d e d 1 9 3 8

OpinionResearchCorporation


43/49

43


RELIAB

ILITYOFSURVEYPERCENTAGES

RELIAB

ILITYOFSU

RVEYPERCENTAGES

Resultsofanys

amplearesubjectto

samplingvariation.T

hemagnitudeofthe

variationis

measurableand

isaffectedbythenumberofinterviewsandthelevelofthep

ercentages

expressingthere

sults.

Thetablebelow

showsthepossible

samplevariationthatappliestopercentageresults

reportedherein.

Thechancesare95in100thatasurveyre

sultdoesnotvary,plusorminus,

bymorethantheindicatednumber

ofpercentagepointsfrom

theresulttha

twouldbe

obtainedifinterviewshadbeenconductedwithallpersonsintheuniverserepresentedbythe

sample.

SizeofSampleon

ApproximateSamplingTolerancesApplicable

WhichSur

veyResults

toPercentagesAtorNearTh

eseLevels

AreBased

10%or90%

20%or80%

30%or70

%

40%or60%

50

%

1,000inter

views

2%

2%

3%

3%

3%

500interviews

3%

4%

4%

4%

4%

250interviews

4%

5%

6%

6%

6%

100interviews

6%

8%

9%

10%

10

%

AdditionalSamplingTolerancesforSamp

lesof1,000Interviews

9%or91%

8%or92%

7%or93%

6%or94%

5%or95%

2%

2%

2%

1%

1%

4%or96%

3%or97%

2%or98%

1%or99%

1%

1%

1%

.2%


44/49

44


SAMPLINGTOLERAN

CESWHENCOMPARINGTWO

SAMPLINGTOLERAN

CESWHENCOMPARING

TWO

SAMPLES

SAMPLES

Tolerancesare

alsoinvolvedinth

ecomparisonofresultsfromindepen

dentparts

ofthesample.

Adifference,inoth

erwords,mustbeofatleastacertain

numberof

percentagepo

intstobeconside

redstatisticallysig

nificantthatisnotdueto

random

chanc

e.

Thetablebelow

isaguideto

thesamplingtole

rancesin

percentagepointsapplicabletos

uchcomparisons,

basedona95%

confidence

level.

DifferencesRequiredfo

rSignificanceAt

SizeofSam

ples

orNearThesePercentageLevels

Compared

10%or90%

20%or80%

30%or

70%

40%or60%

50%

1,000and1

,000

3%

4%

4%

4%

4%

1,000and5

00

3%

4%

5%

5%

5%

1,000and2

50

4%

6%

6%

7%

7%

1,000and1

00

6%

8%

9%

10%

10%

500and500

4%

5%

6%

6%

6%

500and250

5%

6%

7%

7%

8%

500and100

6%

9%

10%

11%

11%

250and250

5%

7%

8%

9%

9%

250and100

7%

9%

11%

11%

12%

100and100

8%

11%

13%

14%

14%


45/49

March2000

Founded1938

Qu

estionnaire

Qu

estionnaire

F o u n d e d 1 9 3 8

OpinionResearchCorporation


46/49

INVESTMENT 1/2 A NOVEMBER 17, 2005714468/9

1

Topline Results of Telephone Interviews With 2,063 Adult Americans

Conducted November 17-21, 2005

A1 Are you an investor, that is, do you own securities such as mutual funds, stocks, bonds, etc?(Base N=2,063 unweighted, 2,000 weighted)

46% YES -->CONTINUE

50 NO

2 DONT KNOW/UNSURE

1 REFUSED -->SKIP TO NEXT SECTION

A2 Do you invest directly or through a retirement plan? Would you say you [READ LIST.

RECORD ONE ANSWER]

(Base N=1,029 unweighted, 927 weighted, investors who own securities such as mutual funds,

stocks, bonds, etc.)

28% Invest directly yourself or through a broker or financial planner/investment advisor

37 Invest through a retirement plan

31 Or, both

2 DONT KNOW

1 REFUSED

IF INVEST DIRECTLY/THROUGH BROKER/FINANCIAL PLANNER/INVESTMENT ADVISOR,

A2 (01, 03), CONTINUE.

ALL OTHERS SKIP TO NEXT SECTION

A3 Do you have a specific FINANCIAL PLAN prepared by yourself or a professional?

(Base N=635 unweighted, 550 weighted, investors who own securities such as mutual funds, stock

or bonds and invest directly themselves or through a broker, planner or advisor)

77% YES

23 NO

1 DONT KNOW

A4 For the LAST 25 YEARS, which ONE of the following investments do you think would have

offered you the BEST RETURN on your money: stocks, bonds, a savings account, or certificates

of deposit (CDs)?

66% STOCKS

11 BONDS

2 SAVINGS ACCOUNT

14 CERTIFICATES OF DEPOSIT

7 DONT KNOW

1 REFUSED


47/49


2

A5 DIVERSIFICATION is the process by which an investor . . . [READ ENTIRE LIST BEFORE

RECORDING ONE ANSWER. ROTATE]

6% Increases his or her chances of hitting the jackpot74 Lowers the potential overall risk of loss by spreading out assets across different

companies, types of funds, and industry sectors

4 Pushes up his or her commission payments by owning too many stocks or mutual funds

14 DONT KNOW

1 REFUSED

A6 A NO-LOAD mutual fund involves no commission or sales charges of any kind. Is this

statement . . . [READ LIST. RECORD ONE ANSWER]

39% True

38 False

22 DONT KNOW

1 REFUSED

A7 When interest rates go up, what usually happens to the PRICE OF BONDS? Would you say . . .

[READ LIST. RECORD ONE ANSWER]

28% Bond prices go up

41 Bond prices go down

16 Bond prices stay the same

14 DONT KNOW

A8 Which of the following statements BEST describes FULL-SERVICE BROKERS AND MOSTFINANCIAL PLANNERS OR INVESTMENT ADVISORS? Most brokers and financial

planners . . . [READ ENTIRE LIST BEFORE RECORDING ONE ANSWER. ROTATE]

17% Are financial advisors who are paid in direct relation to the quality of the advice they offer

11 Only make money if you make money as their client

61 Are salespeople who are paid in direct relation to the amount and type of investments they

sell

10 DONT KNOW

1 REFUSED

A9 What does the term PROSPECTUS mean? Is it . . . [READ ENTIRE LIST BEFORERECORDING ONE ANSWER. ROTATE]

29% A quarterly profit and loss statement sent to all shareholders in a company

57 An analysis of a companys finances, products, and management made available when

stock is first issued

14 DONT KNOW/NEITHER

1 REFUSED


48/49


3

A10 Have you ever READ A PROSPECTUS for a mutual fund or stock?

58% YES

39 NO2 DONT KNOW

1 REFUSED

A11 Have you checked out the DISCIPLINARY BACKGROUND of your broker or financial

planner?

36% YES

54 NO

8 DONT USE BROKER/FINANCIAL PLANNER/INVESTMENT ADVISOR

2 DONT KNOW

1 REFUSED

[ASK IF NO IN A11 (02)]

A12 Why not? Would you say because . . . [READ AND ROTATE LIST. RECORD AS MANY

AS APPLY. WAIT FOR YES OR NO FOR EACH]


or bonds and invest directly themselves or through a broker, planner or advisor, and have not

checked out the disciplinary background of the broker/planner.

22% You didnt know how to get the information

61 You trust him or her

9 He or she told you there was no problem

19 DONT KNOW2 REFUSED

A13 Do you review your mutual fund or brokerage ACCOUNT STATEMENTS and the other

periodic reports about your investments?



90% YES

9 NO

1 DONT KNOW


49/49


4

[ASK IF NO IN A13 (02)]

A14 Why not? Which of the following comes CLOSEST to describing your situation? [READ

ENTIRE LIST BEFORE RECORDING ONE ANSWER. ROTATE]

(Base N=45 unweighted, 48 weighted, investors who own securities such as mutual funds, stockor bonds and invest directly themselves or through a broker, planner or advisor, and do not review

statements from mutual funds or brokerage accounts.

13% You dont understand them, theyre too complicated

38 You have no time, youre too busy

20 You rely on others to review

14 You trust your broker or financial planner to keep track of things

3 OTHER [SPECIFY]

9 DONT KNOW

3 REFUSED

A15 I want you to think about RISK as it relates to investing for your retirement. Which of the

following statements BEST describes your attitude about risk as it relates to your retirement

savings? [READ ENTIRE LIST BEFORE RECORDING ONE ANSWER. ROTATE]



24% If you take risks, you could end up with nothing for your retirement years, so you avoid

taking risks

69 Taking risks in long-term investments is essential if you are to build a retirement nest-egg

5 DONT KNOW

2 REFUSED

A16 Which of the following organizations INSURES YOU AGAINST LOSING MONEY as the

result of FRAUD in your investment portfolio? [READ AND ROTATE LIST. RECORD AS

AS MANY AS APPLY. WAIT FOR YES OR NO FOR EACH]

42% Securities and Exchange Commission

41 Federal Deposit Insurance Corporation

23 Securities Investor Protection Corporation

8 NONE OF THESE

11 DONT KNOW

1 REFUSED

"Investor Survivor Skills Survey" by Opinion Research Corporation

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Transcript of "Investor Survivor Skills Survey" by Opinion Research Corporation