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Press release from Business Wire

“Highly Engaged” Americans Deeply Divided in Their Approach to Investing Says New Schwab Study

Wednesday, June 12, 2013

“Highly Engaged” Americans Deeply Divided in Their Approach to Investing Says New Schwab Study

09:00 EDT Wednesday, June 12, 2013

SAN FRANCISCO (Business Wire) -- 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:

             
     

Engaged in Investing (61%)

   

Less Engaged in Investing (39%)

I review my portfolio on a regular monthly basis     72%     37%
I take time to understand the wide array of available products.     61%     23%
I make changes to my portfolio when something in my life changes to make sure my investments are still right for me     57%     31%
I make portfolio changes when the market moves to make sure my investments are still right for me    

46%

    20%
I proactively call my investment professional to discuss investments*     45%     24%

*Among those with a primary investment professional

 

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.

             
Life Behavior     % of Engaged Investors     Investing Behavior
(In the past year)           (In the past six months)
Conduct research before making major purchases     86     61     Have asked their investment professional for the reasons behind investment recommendations*
Examine ingredients in food before buying it     83     21     Examined their fees in detail with their investment professional*
Have called a company to better understand a bill     69     18     Have reviewed how fees and commissions impacted their returns*
Have called a phone, cable or other service provider to ask about better service or lower rates     67     12     Have had a detailed conversation about how their investment professional is compensated*

*Among those with a primary investment professional

             
Life Behavior % of Less Engaged Investors Investing Behavior
(In the past year)           (In the past six months)
Conduct research before making major purchases     78     50     Have asked their investment professional for the reasons behind investment recommendations*
Examine ingredients in food before buying it     84     16     Examined their fees in detail with their investment professional*
Have called a company to better understand a bill     65     12     Have reviewed how fees and commissions impacted their returns*
Have called a phone, cable or other service provider to ask about better service or lower rates     64     8     Have had a detailed conversation about how their investment professional is compensated*

*Among those with a primary investment professional

 

“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 principle.

Koski Research is unaffiliated with the Charles Schwab Corporation and its affiliates.

(0613-4154)

Charles Schwab
Michael Cianfrocca, 415-667-0344
michael.cianfrocca@schwab.com
or
Edelman
Kate Clark, 212-704-4491
katherine.clark@edelman.com

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