Recent research spearheaded by The Investing and Saving Alliance (TISA), with contributions from Vanguard, Life Moments, and EY Seren, focuses on the accessibility and utility of investment fund performance reports. This study highlights substantial challenges investors face when interpreting these reports and proposes several enhancements to improve their effectiveness.
The analysis reveals that 80% of investors overlook performance reports, finding them too complex to interpret. Less confident investors struggle particularly with key financial terms and metrics, impacting their decision-making capabilities. Additionally, women and ethnic minorities report greater difficulty comprehending these disclosures, with 85% of women and 94% of ethnic minority investors facing challenges.
Investors prefer alternative sources for investment advice, such as family, friends, information sites, TV programs, and social media, over performance reports. Only 12% of investors rely on performance disclosures, with even fewer women (7%) utilizing them compared to men (18%).
Recommended improvements include integrating educational content and benchmarking features into the reports to support better financial decisions. The use of AI tools to provide clearer explanations and custom visualization features is emphasized. Ninety-five percent of less confident investors believe educational content would enhance their understanding, and 94% think it would improve their decision-making.
The study underlines the urgent need to redesign performance reports to be more understandable and inclusive. Implementing educational resources, AI tools, and clear benchmarks could transform these reports into valuable tools, fostering an informed and confident investing environment. Financial services firms are urged to embrace these recommendations to better serve a diverse investor community.
