Advisors, take credit for the work you do. The Investment Funds Institute of Canada’s inaugural survey of investor attitudes and perceptions indicates you are the most consulted information source when Canadians invest in mutual funds.
The vast majority of the investors questioned in the survey say they buy mutual funds through an advisor and rate the importance of their advisor’s opinion when investing in a fund as 7.7 on a 10-point scale. When it comes to information, mutual fund investors consult the fund company material (60% of mutual fund investors surveyed), talk to friends and relatives (32%) or check out a company’s Web site (21%). But it is the advisor who gets the highest rating for being consulted about fund information (94%).
The IFIC survey also indicates an overwhelming percentage of investors questioned were comfortable that they had the right information to make informed choices. And they indicated they would like the information they receive prior to a purchase and on an ongoing basis to be shorter and simpler.
Point-of-sale information and ongoing reporting are topics that are keeping industry participants busy these days — from regulators to industry associations.
Point-of-sale information now falls un-der the Canadian Securities Ad-ministrators‘ registration reform project, a wide-ranging plan that includes many dimensions of potential regulatory change. The general intent of point-of-sale disclosure under the RRP is to harmonize the approach for mutual funds and segregated funds.
In Canada, the U.S. and Britain, regulators are working on new point-of-sale documentation and reviewing what kind of information it should contain. These efforts are all in the proposal stage right now.
POINT-OF-SALE INFORMATION
These documents all contain items such as clarity and simple language. Most also have information about fees —- -how much investors should be paying when they purchase a product and how much they should be paying annually. Virtually all contain some sort of information on risks.
Canadian securities regulators are not the only ones tussling with point-of-sale information. In the U.S., a proposal to shorten the amount of point-of-sale information given to investors nevertheless includes such things as the fund’s principal investment strategies, risks to the investor and the fund’s change in value over the past 10 years, as well as average performance, fees and potential conflicts of interest.
The proposal, put forward by the National Association of Securities Dealers, is being looked at by the U.S. Securities and Exchange Commission.
In Britain, the Financial Services Authority is hoping to come out with a proposal on point-of-sale disclosure later this year.
IFIC’s survey also shows that investors want a compact annual report that contains the information they need to keep them updated on the fund’s activities.
It may take some time to come up with documents that meet both investor and industry requirements in these areas. But, if the number of meetings I have recently attended with regulators and IFIC members is any indication, there is a genuine eagerness to get to the heart of these issues.
When this does come to pass, it is hoped that investors will better understand and more readily retain the information they are given. They will still come to advisors as their major source of information, but they will do so more informed and more educated, able to ask the pertinent questions that will strengthen the client/advisor relationship.
Full survey results can be seen at www.ific.ca after Sept. 29. IE
Joanne De Laurentiis is president and CEO of the Investment Funds Institute of Canada.