Magazine article American Banker

Educate Customers Better, Execs Are Told

Magazine article American Banker

Educate Customers Better, Execs Are Told

Article excerpt

WASHINGTON -- Speakers at the annual Investment Company Institute conference are warning mutual fund company executives that their industry needs to do a better job of educating investors.

Both on the podium and in the corridors, attendees are expressing concern that consumers may not always understand the risks of investing. And that lack of knowledge may come back to haunt mutual fund sellers later.

The mutual fund industry should be trying to remedy its problems now, Arthur Levitt Jr., chairman of the Securities and Exchange Commission, told an audience of 1,500 people gathered here for the trade group's conference on "Obligations and Opportunities in an Expanding Market."

Quoting John F. Kennedy, Mr. Levitt warned that "the time to repair the roof is when the sun is shining."

In a presentation entitled "Investor Education: What Are Our Obligations?" panelists agreed that there is a serious need for better, clearer information.

While companies have made an effort to improve their marketing materials and clarify prospectuses, that is not good enough, said John Markese, president of the American Association of Individual Investors, a Chicago-based group that represents 170,000 members.

"Prospectuses will never be an educational document," Mr. Markese said.

Although demographic research indicates that more of the consumer group's members are earning college and graduate degrees, they are not necessarily more sophisticated financially.

"I think we have a bright individual investor populace," Mr. …

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