Data & Research November 7, 2014

Bring on the Regulation, Investors Say

A majority of investors (92%) surveyed by FINRA agreed they want a cop on the beat to protect investors and police the markets.
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Nearly three-quarters of investors (70%) of investors surveyed by the Financial Industry Regulatory Authority (FINRA) strongly agreed and 24% of investors somewhat agreed it is important that regulators use the latest tools and technology to protect investors. Overall, investors surveyed by FINRA strongly agreed that regulation and investor protections are important.

Nearly three quarters of investors (74%) would support additional regulatory protections to safeguard them from misconduct by brokers or brokerage firms. Support was strong across age groups and investment levels. Only one in five (22%) expressed opposition to additional protections if it meant a minimal increase in the costs that brokerage firms passed on to them. By comparison, 56% of those surveyed expressed support for additional protections even if it meant a minimal increase in their costs.

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While FINRA has previously surveyed investors regarding investor literacy—the understanding ordinary investors have of market principles, instruments, organizations and regulation—the current survey is designed to assess investor attitudes regarding regulatory protections.

Highlights include:

  • 88% of investors believe it’s moderately or very important for regulators to detect when unsuitable securities are being sold to investors;
  • 90% believe it’s moderately or very important for regulators to detect when brokers are making trades that benefit themselves and not the investor;
  • 89% believe it’s moderately or very important for regulators to detect when firms are taking risks that potentially harm their investors and the financial system; and
  •  70% strongly agree it’s important that the markets offer a level playing field for both big and small investors.

FINRA’s Investor Survey, designed to measure perceptions of fairness and to gauge demand for additional regulatory protections, was conducted October 7 through October 9, and October 27 through October 29. Survey respondents were 1,000 U.S. adults ages 21 or older, having primary or shared responsibility in their household for investment decisions, and recruited from a nationally distributed online panel. More than 70% had investments over $100,000.

Charts and graphs from the Investor Survey, as well as the underlying survey data, are available for download. Survey results can be accessed here.

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