“Our survey shows improved satisfaction with the industry and the services it provides,” said SIA Chairman Richard E. Thornburgh, vice chairman of the Executive Board of Credit Suisse First Boston and a member of the Executive Board of the Credit Suisse Group. “Investors continue to believe that the services provided by their broker or adviser are ‘a good value for the money.’ They are encouraged by the industry’s reforms but are guarded in their outlook about the potential benefits of reform. We believe that the industry has made progress in addressing investor concerns, and we recognize that there is more to be done.”
Satisfaction With Brokers Remains High
According to the survey, respondents remain satisfied with the quality of services they receive from their broker. As in 2003, nine in 10 investors responded that they were either “very” or “somewhat satisfied” with their investment professional. Seventy-one percent believe that these services are a “good value for the money,” which is consistent with last year’s 74 percent. Brokers continued to be especially praised for offering “easy access to account information” (92 percent of respondents selected “excellent” or “good” job), “prompt return of phone calls” (83 percent), and “friendly and helpful” service (84 percent).
Brokers continued to receive high percentages of favorable ratings for: keeping their clients “regularly informed” about their investments’ performance (74 percent), maintaining a “track record of strong performance” (74 percent), and helping clients develop an overall strategy and asset allocation (70 percent).
Fewer respondents, however, said their advisers were doing an “excellent” or “good job” of teaching them “how to make better investment decisions.” This measure dropped from 59 percent to 54 percent. “We have the responsibility to provide our clients with clear, understandable information about their investment choices, and to provide them with the tools they need to improve their level of knowledge,” said Thornburgh.
Majority Believe Reforms Will Work
The majority of investors believe that the regulations adopted recently will curb abuses in the securities industry. Fifty-seven percent are confident that these will reduce instances of wrongdoing, compared with 48 percent who answered similarly in 2003. The industry supports initiatives that protect the interests of all investors,” said Thornburgh.
“We will continue to work with regulators and member-firms so that investors receive the information they need, and to ensure that we are worthy of the investor’s trust,” said Thornburgh.
Satisfaction With Investment Performance Increases, As Do Expectations
Forty-one percent of respondents were satisfied with the performance of their investments in 2004, an increase of six percentage points from 2003’s results. However, their expectations are still higher than what long-term historical returns would suggest are realistic.
“The industry needs to continue its efforts to educate clients about what are realistic returns based on the degree of risk they are willing to assume,” Thornburgh said.
Investors Want To Be Educated
The vast majority of respondents (84 percent) continue to look to the securities industry to do more to educate them about how to make good investments. When asked unprompted what areas they would like to know more about, the most requested topics were: “information about different types of investments” (21 percent); “the risk involved in different investments” (10 percent); and, “what fees and expenses are related to my investments” (eight percent).
The percentage of respondents who felt they have all, or most of, the knowledge they need to make good investment decisions increased to 42 percent from 2003’s 33 percent
Cautiously Optimistic Outlook
Investors’ outlook for the markets in 2005 is cautious, with almost half (45 percent) expecting an “average” year. Fewer expect a “good” or “very good” year (40 percent vs. 46 percent in 2003), as uncertainties about the presidential election and the economy were affecting their investment decisions as this survey was taken in August.
Investors’ main concerns are the presidential election (60 percent) and the state of the economy (52 percent). Fifty-one percent expressed concerns about accounting fraud, and 42 percent were concerned about corporate governance issues.
Survey Methodology
The study was conducted via telephone between August 2 and September 7, 2004. The sample group interviewed by Wirthlin Worldwide, consisted of investors 18 years or older with household incomes of $50,000 or more and investable assets of $100,000 or more (not including a home). Those interviewed were the primary decision-maker regarding financial investments. Random digit dialing was used to ensure that listed and unlisted numbers had an equal chance of being dialed. Approximately 1,500 surveys were completed. The sampling error is plus or minus two percent.
Survey highlights are available at
http://www.sia.com/blastemail/pdf/2004InvSurveyPressDeck.pdf
