SEC study: Retail investors lack financial literacy
As directed by Section 917 of Dodd-Frank, the SEC has published its "Study Regarding Financial Literacy Among Investors," which comes to the conclusion that retail investors aren't all that financially literate and that the industry could do much better explaining various fees and other disclosures.
The study's conclusions really aren't anything new. For as long as I can remember, people have been discussing the public's relative lack of financial literacy and what should be done about it. What is new is the environment in which the study was conducted. These are tough times and the retail investment crowd has taken a step back from the market.
While the study has some interesting things to say about fee disclosure and how companies ought to go about it and about literacy in general, it would be a stretch to suggest that raising the level of financial understanding and disclosing fees would really make a huge difference. Literacy, while a laudable goal, will not get the retail crowd back into the stock market.
What will it take? Prosperity and market performance. Retail investors will not come storming back until they are convinced they can make money doing so. That's a hard case to make.
- here's the article