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

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

Business Wire

SAN FRANCISCO -- June 12, 2013

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        Less Engaged in
                                           Investing (61%)     Investing (39%)
I review my portfolio on a regular       72%               37%
monthly basis
I take time to understand the wide       61%               23%
array of available products.
I make changes to my portfolio when
something in my life changes to make     57%               31%
sure my investments are still right
for me
I make portfolio changes when the
market moves to make sure my             46%               20%
investments are still right for me
I proactively call my investment         45%               24%
professional to discuss investments*
*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)
                                                     Have asked their
Conduct research                                     investment professional
before making major     86             61      for the reasons behind
purchases                                            investment
                                                     recommendations*
Examine ingredients                                  Examined their fees in
in food before buying   83             21      detail with their
it                                                   investment professional*
Have called a company                                Have reviewed how fees
to better understand    69             18      and commissions impacted
a bill                                               their returns*
Have called a phone,                                 Have had a detailed
cable or other                                       conversation about how
service provider to     67             12      their investment
ask about better                                     professional is
service or lower                                     compensated*
rates
*Among those with a primary investment professional
                                               
Life Behavior             % of Less Engaged          Investing Behavior
                          Investors
(In the past year)                              (In the past six months)
                                                     Have asked their
Conduct research                                     investment professional
before making major     78             50      for the reasons behind
purchases                                            investment
                                                     recommendations*
Examine ingredients                                  Examined their fees in
in food before buying   84             16      detail with their
it                                                   investment professional*
Have called a company                                Have reviewed how fees
to better understand    65             12      and commissions impacted
a bill                                               their returns*
Have called a phone,                                 Have had a detailed
cable or other                                       conversation about how
service provider to     64             8       their investment
ask about better                                     professional is
service or lower                                     compensated*
rates
*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)

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Contact:

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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