Data & Research February 23, 2012

Majority of Young Adults Do Not Invest in Retirement Accounts

Seventy-three percent of Americans ages 18 to 34 do not currently invest in retirement accounts such as a 401(k) or IRA. 
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According to a recent CouponCabin survey, nearly four in 10 (39%) U.S. adults ages 18 and over report they don’t currently have any types of financial investments, like 401(k)s or IRA retirement accounts, mutual funds or stocks. In addition, 61% of U.S. adults said they have reservations about investing in the stock market. Their concerns include not having enough money to invest (32%), not trusting the stock market (26%), thinking it’s too complicated (17%) and being unsure of how to get started (11%). Those ages 18 to 34 were more likely to say they don’t have any financial investments at all (55%).

Even though many U.S. adults report they don’t have financial investments, they are still keeping an eye on the market. Fifty-five percent of U.S. adults said they follow the stock market in some capacity, with one quarter (25%) reporting they track its ups and downs at least once a week. When it comes to young adults, there was a significant difference between men and women. Fifty-nine percent of men ages 18 to 34 said they follow the stock market, compared to 30% of women ages 18 to 34.

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While some Americans report they are intimidated by the complexity of the market, others said if the economy were more stable, they would be more likely to invest. Thirty-nine percent said they were much or somewhat more likely to invest money in the market if the economy were more stable; 46% said they weren’t any more or less likely to invest if the economy were more stable; and 15% said they were much/somewhat less likely to invest.

Regardless of apprehensions in investing in the stock market, many U.S. adults said they would be open to learning more about the process. Forty-three percent would be at least somewhat likely to consider taking a course or class to learn more about the stock market and investments.

The survey was conducted online within the U.S. by Harris Interactive on behalf of CouponCabin from February 7 to 9, 2012, among 2,339 U.S. adults ages 18 and older. 

 

Compliance February 23, 2012

FINRA Issues Investor Alert

The Financial Industry Regulatory Authority (FINRA) issued an investor alert called “It Pays to Understand Your Brokerage Account Statements and Trade Confirmations.”
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The alert is designed to help guide investors through the key elements of their account statements and trade confirmations. FINRA is reminding investors that reviewing their account statements not only helps them stay on top of their holdings, but also alerts them of errors, as well as broker or firm misconduct, such as unauthorized trading or overcharging customers for handling transactions. 

“Investors whose portfolios have taken a hit might not be keen to open their account statements, but investors should review their statements carefully—and immediately call the firm that issued the statement about any fee they do not understand or transaction they did not authorize,” said Gerri Walsh, FINRA’s vice president for Investor Education. “Investors should also review trade confirmations as soon as they receive them because a single keystroke can make the difference between 100 and 1,000 shares.”

In most cases, brokerage firms are required to provide customers with quarterly account statements and written notification of trade confirmations at or before completion of a transaction. “It Pays to Understand Your Brokerage Account Statements” details in plain language the key elements of account statements and “red flags” that can help investors spot and avert problems. Many account statements include an investment objective that characterizes an investor’s strategy, such as “growth” or “conservative.” Investors should ensure that this description, as well as the account activity, accurately reflects their goals.

Consolidated account statements, which provide customers with a single document that combines information on most or all of their financial holdings regardless of where those assets are held, are growing in popularity. Investors should understand that these consolidated statements supplement, but do not replace, the required brokerage account statement. Investors who receive both kinds of statements should keep in mind that the official brokerage statement is used in case of a dispute with the broker or firm.

“It Pays to Understand Your Brokerage Account Statements” explains that trade confirmations disclose whether your broker acted as an agent for you or whether the firm acted as a principal for its own account. In equity transactions, if the firm acts as an agent, then the firm must disclose the commission you were charged either on the confirmation or upon request by you. If the firm acts as principal, it is acting for its own benefit, and any markup or markdown or commission-equivalent must be disclosed on the confirmation.

Investors who find inaccuracies or discrepancies on any of their statements should contact their broker or firm as soon as possible, and if the problem is not resolved, FINRA urges investors to file a complaint using FINRA’s online Complaint Center.

“It Pays to Understand Your Brokerage Account Statements” is available here. 

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