Understanding Shareholders' Use of Information and Advisers (pdf)

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T A B L E O F C O N T E N T SList of Figures ....................................................................................................vIntroduction .......................................................................................................1Executive Summary ............................................................................................3CHAPTER 1: The Role of Professional Investment Guidance in the Mutual FundPurchase Decision..............................................................................................9Summary..............................................................................................................................................9Use of Professional Financial Advisers.................................................................................................10Characteristics of Investors Who Consult and Do Not Consult an Adviser .........................................10Characteristics of the Shareholder/Adviser Relationship......................................................................14CHAPTER 2: Information Needs Before and After Purchasing a Mutual Fund .........19Summary............................................................................................................................................19The Pre-purchase Process....................................................................................................................20Monitoring Mutual Fund Investments................................................................................................23Use of Account Statements, Prospectuses, and Annual Reports ...........................................................26CHAPTER 3: Improving Shareholder Understanding of Mutual Fund Investing........29Summary............................................................................................................................................29Interest in Learning More About Mutual Funds..................................................................................30Reaching Interested Shareholders........................................................................................................30CHAPTER 4: Shareholder Market Segments by Needs for Information andProfessional Assistance....................................................................................33Summary............................................................................................................................................33Market Segmentation .........................................................................................................................34Do-It-Yourself Shareholders................................................................................................................34Adviser-Partnership Shareholders........................................................................................................35Passive Shareholders............................................................................................................................36Appendix A: Research Methodology ...................................................................43Research Design .................................................................................................................................43Sample Design and Weighting............................................................................................................43Sampling Tolerances ...........................................................................................................................43Data Analysis......................................................................................................................................44Appendix B: Supplemental Data .........................................................................45iii
L I S T O F F I G U R E SEXECUTIVE SUMMARYFIGURE 1 The Relationship with Professional Financial Advisers in the Mutual Fund Purchase Process . . . . . . . . . . . . . . . . . . .3FIGURE 2 Fund Information Most Frequently Considered Before and After a Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4FIGURE 3 Sources of Fund Information Most Frequently Used Before and After a Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . .4FIGURE 4 Characteristics of Respondent Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5FIGURE 5 Mutual Fund Topics of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6FIGURE 6Respondents Mentioning Mutual Fund Companies as a Preferred Source of MutualFund Educational Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7CHAPTER 1The Role of Professional Investment Guidance in the Mutual Fund Purchase DecisionFIGURE 7 Shareholders' Use of Professional Financial Advisers in Making Investment Decisions . . . . . . . . . . . . . . . . . . . . . . . . .9FIGURE 8 Primary Professional Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10FIGURE 9 Demographic and Financial Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11FIGURE 10 Mutual Fund Ownership Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12FIGURE 11 Nature of Relationship with Primary Professional Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14FIGURE 12 Contacts with Primary Financial Adviser per Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15FIGURE 13 Acceptance of Adviser's Fund Purchase Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16FIGURE 14 Primary Financial Advisers' Single Most Important Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17CHAPTER 2Information Needs Before and After Purchasing a Mutual FundFIGURE 15 Value Shareholders Associate with Primary Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18FIGURE 16Number of Information Sources Used by Shareholders Before and After Purchasing TheirMost Recent Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19FIGURE 17 Fund-related Information Considered Before Most Recent Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21FIGURE 18 Mutual Fund Information Sources Used Before Most Recent Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22FIGURE 19 Periodicals Most Frequently Consulted Before Most Recent Fund Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23FIGURE 20 Mutual Fund Information Monitored at Least Four Times a Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24FIGURE 21 Sources Used to Monitor Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25FIGURE 22 Use of Mutual Fund Account Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26FIGURE 23 Use of Mutual Fund Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27FIGURE 24 Use of Mutual Fund Prospectuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28CHAPTER 3Improving Understanding of Mutual Fund InvestingFIGURE 25 Interest in Learning More About Investing in Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29FIGURE 26 Mutual Fund Topics of Interest by Use of an Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30FIGURE 27 Preferred Sources for Mutual Fund Educational Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31FIGURE 28 Preferred Format for Mutual Fund Educational Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32v
Page 1 and 2: ICI Research SeriesUnderstandingSha
Page 3: Copyright © 1997 by the Investment
Page 7 and 8: I N T R O D U C T I O NBACKGROUNDTh
Page 9 and 10: company sponsoring the fund, the fu
Page 11 and 12: ■chases. However, more Adviser-Pa
Page 13 and 14: C H A P T E R 1The Role of Professi
Page 15 and 16: Respondents Who Effectively Delegat
Page 17 and 18: Respondents Who Have a Collaborativ
Page 19 and 20: elationship as a joint effort, and
Page 21 and 22: Adviser’s Most Important Function
Page 23 and 24: C H A P T E R 2Information Needs Be
Page 25 and 26: ters. Only 19 percent of respondent
Page 27 and 28: MONITORING MUTUAL FUND INVESTMENTSI
Page 29 and 30: Among respondents consulting a prof
Page 31 and 32: three. In particular, the majority
Page 33 and 34: C H A P T E R 3Improving Shareholde
Page 35 and 36: FIGURE 27Preferred Sources for Mutu
Page 37 and 38: C H A P T E R 4Shareholder Market S
Page 39 and 40: account, yield or rate of return, p
Page 41 and 42: the survey, compared with ten years
Page 43 and 44: FIGURE 38Respondent Segments’ Pre
Page 45 and 46: FIGURE 40Respondent Segments’ Rel
Page 47 and 48: A P P E N D I X AResearch Methodolo
Page 49 and 50: A P P E N D I X BSupplemental DataF
Page 51 and 52: FIGURE 47Fund-related Information C
Page 53 and 54: FIGURE 49Periodicals Most Frequentl
Page 55 and 56:
FIGURE 51Sources Used to Monitor Mu
Page 57 and 58:
FIGURE 53Use of Mutual Fund Annual
Page 59 and 60:
FIGURE 55Interest in Learning More
Page 61 and 62:
FIGURE 58Preferred Format for Mutua
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