Investors are pretty savvy about some of the major financial decisions facing them today, according to two national polls that were released recently.
The two surveys — one by the Investment Funds Institute of Canada and the other by the Canadian Securities Admin-istrators — are very different in terms of audience, methodology and the questions they asked. For example, IFIC surveyed only mutual fund investors, while the CSA polled the general public. The CSA’s findings involved those who invest in stocks, bonds and mutual funds.
Despite the differences, there are similarities between the two polls. Both studies show their respondents have a healthy respect for investment risk.
The IFIC study found that the last time mutual fund investors bought a mutual fund, 86% considered the risks associated with investing in a fund (a rating of five or higher on a 10-point scale).
The CSA study found that 86% of those it polled understand the risks of each of their investments, and 73% disagreed that the only way to make good returns is to make risky investments.
Both studies also show respondents recognize the importance of diversification.
In the IFIC study, 89% of mutual fund investors surveyed said diversification and the ability to manage risk were “very” or “somewhat important” in their decision to buy mutual funds.
The CSA study found 64% of those questioned said diversification was the most important consideration in making investment decisions.
Both studies show investors value the importance of regulatory agencies.
The IFIC study found that 76% of mutual fund investors said the amount of regulation in the mutual fund industry is an important consideration in their decision about whether to invest in a mutual fund.
The CSA poll found that 82% of Canadians believe setting the rules for the province’s investment industry is an “extremely important” or “very important” priority for provincial regulatory agencies.
Both studies also show that investors rely on advisors for input (but mutual fund investors more so), tend to take a role in their own investment decisions and believe there is room for improvement in terms of knowledge of how to resolve investment problems.
At IFIC, the needs and wants of investors continue to be a major plank in the future of the investment funds organization. The recent survey is one example of that. It is only through ongoing annual surveys that we will be able to drill down and gain empirical information about what investors know about their products, the best way for them to get information, how best to stay informed and where they can go to get help if they have problems.
We also want to increase the amount of top-quality investor education that we know is already being provided by mutual fund managers and dealers. That is why we are proud to sponsor the first IFIC Investor Education Award, which will be granted at the end of November at the Canadian Investment Awards.
Working with investors through the survey has given us crucial first-hand knowledge. Working with regulators, such as the CSA, has engaged our members more actively in the regulatory process.
We hope that the needs of investors and the needs of our members will meld together with the regulatory process to continue to benefit all parties concerned and ensure that investing remains a positive experience. IE
Joanne De Laurentiis is president and CEO of the Investment Funds Institute of Canada.