A majority of Americans who are highly engaged across many aspects of
life also grab hold of the wheel when it comes to investing, according
to a new study by Charles Schwab. But a sizeable number of go-getters in
life say they are not actively involved in their investment portfolio,
revealing a dichotomy between how they engage in life and their behavior
when it comes to investing.
Today’s Engaged Investor surveyed 1,000 Americans who express a
significant degree of personal ownership in their everyday lives. The
study found that a majority are also highly engaged in investing: nearly
two-thirds (61 percent) are actively involved in their investment
portfolios. A smaller but significant portion of those surveyed (39
percent) say they are not actively engaged in their portfolios.
“Whether a result of the financial crisis and the challenging, dynamic
investing environment that followed or a symptom of the low levels of
trust in the financial services industry, there is clearly a trend
towards a greater degree of personal involvement in investing – even
among those who may have taken a more back seat role in the past,” says
executive vice president and co-head of Schwab Investor Services John
Clendening. “Among our own clients, we’ve seen an increased level of
engagement, and with that, a greater sense of confidence and optimism
about the future.”
All 1,000 investors surveyed are active and engaged in their every day
lives. For example, 88 percent say it is important for parents to be
active in their children’s education and schools, 74 percent think hard
work is what makes this country great, and 67 percent conduct their own
research on health concerns as well as seeing a doctor. When using the
services of a professional like a home contractor, doctor or accountant,
just four percent of these individuals prefer to let the professional
make the decisions without their involvement.
A Dichotomy When it Comes to Investing
While all survey respondents display similarly tenacious attitudes and
behaviors in their lives, there are numerous differences between those
who are engaged in investing and those who are not:
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Engaged in Investing (61%)
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Less Engaged in Investing (39%)
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I review my portfolio on a regular monthly basis
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72%
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37%
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I take time to understand the wide array of available products.
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61%
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23%
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I make changes to my portfolio when something in my life changes to
make sure my investments are still right for me
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57%
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31%
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I make portfolio changes when the market moves to make sure my
investments are still right for me
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46%
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20%
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I proactively call my investment professional to discuss investments*
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45%
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24%
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*Among those with a primary investment professional
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When looking specifically at the group that is less engaged in
investing, the study reveals attitudes and behaviors that are
inconsistent with this group’s general level of engagement in life.
Three-quarters (76 percent) say they take charge in their lives and
wouldn’t have it any other way, yet just one-third (33 percent) think
it’s very important to be engaged with investing, and more than nine in
10 (94 percent) call themselves planners, but only 38 percent actually
has a financial plan.
Buyer Aware…or Not?
In contrast to their behavior in other areas of their lives, the study
reveals that both groups are less engaged in certain areas of investing,
including how they interact with professionals. These discrepancies are
more pronounced among the less engaged group.
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Life Behavior
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% of Engaged Investors
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Investing Behavior
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(In the past year)
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(In the past six months)
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Conduct research before making major purchases
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86
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61
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Have asked their investment professional for the reasons behind
investment recommendations*
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Examine ingredients in food before buying it
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83
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21
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Examined their fees in detail with their investment professional*
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Have called a company to better understand a bill
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69
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18
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Have reviewed how fees and commissions impacted their returns*
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Have called a phone, cable or other service provider to ask about
better service or lower rates
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67
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12
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Have had a detailed conversation about how their investment
professional is compensated*
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*Among those with a primary investment professional
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Life Behavior
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% of Less Engaged Investors
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Investing Behavior
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(In the past year)
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(In the past six months)
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Conduct research before making major purchases
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78
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50
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Have asked their investment professional for the reasons behind
investment recommendations*
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Examine ingredients in food before buying it
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84
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16
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Examined their fees in detail with their investment professional*
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Have called a company to better understand a bill
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65
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12
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Have reviewed how fees and commissions impacted their returns*
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Have called a phone, cable or other service provider to ask about
better service or lower rates
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64
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8
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Have had a detailed conversation about how their investment
professional is compensated*
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*Among those with a primary investment professional
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“In our opinion, the financial services industry, especially traditional
Wall Street brokerage firms, has made investing too complex, opaque, and
inflexible, all of which we believe create roadblocks for engagement,”
said Clendening. “We’ve seen an influx of new clients who are
increasingly engaged and demanding clarity, choice, and control across
all areas of their lives. We’re squarely focused on serving these needs,
and we encourage others firms to do a better job of delivering
information, products and services on these terms to build investing
engagement.”
About the Study
Today’s Engaged Investor: An Approach to Investing Borrowed from Life
was conducted by Koski Research from April 8-17, 2013, among 1,000
Americans ages 25-75 with $250,000 or more in investable assets and who
are highly engaged in their lives. The study was conducted using an
online panel of investors. Survey respondents are primarily clients of
large, national brokerage firms - 88 percent are clients of a wirehouse
or other national brokerage firm (nine percent are Schwab clients),
seven percent are clients of an independent broker dealer (IBD), three
percent are clients of an independent registered investment advisor
(RIA), and two percent are clients of firms categorized as “other.” In
reading the results of this study, the general rule of thumb is that the
margin of error is about 3.1 percent on the total sample and greater
when looking at results for specific subgroups.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity.
More information is available at www.aboutschwab.com.
Follow us on Twitter,
Facebook,
YouTube,
LinkedIn
and our Schwab
Talk blog.
Disclosures
Through its operating subsidiaries, The Charles Schwab Corporation
(NYSE: SCHW) provides a full range of securities brokerage, banking,
money management and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC,
www.sipc.org),
and affiliates offer a complete range of investment services and
products including an extensive selection of mutual funds; financial
planning and investment advice; retirement plan and equity compensation
plan services; compliance and trade monitoring solutions; referrals to
independent fee-based investment advisors; and custodial, operational
and trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles Schwab
Bank (member FDIC and an Equal Housing Lender), provides banking and
lending services and products. More information is available at www.schwab.com
and www.aboutschwab.com.
Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value
Investing involves risk, including possible loss of principal.
Koski Research is unaffiliated with the Charles Schwab Corporation and
its affiliates.
(0613-4154)

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