A NEW survey of Canadian online investors has found that few rely on formal disclosure documents like annual reports for investment information, even though most describe themselves as long-term investors.
The findings of the latest RBC Direct Investing poll of 630 online investors once again highlights the need for companies and their regulators to rethink the role annual reports and prospectuses play in investor relations and financial disclosure programs.
The poll found that just 12% of those surveyed said they used “mutual fund prospectuses or corporate annual reports” for their online investing research. Interestingly, more females (17%) than males (9%) do online investing research using these sources.
Here’s how the responses broke down when people were asked “Where do you get your research for online investing?”:
- 62% — online resources other than my online brokerage website;
- 52% — general media (newspapers, magazines, TV);
- 51% — my online brokerage (website, telephone, e-mail, etc.);
- 39% — financial or business media;
- 23% — family and friends;
- 18% — my financial advisor;
- 12% – mutual fund prospectuses or corporate annual reports;
- 5% – other
Echoes prior findings
The results of this survey echo findings in a range of other investor surveys going back several years. All show that few investors use corporate annual reports and formal disclosure documents – and those who do consult them do so only briefly.
Recently, a survey by Sweden-based Box IR of 106 investment professionals found that online annual reports ranked among the least useful activities companies can undertake. And a large-scale survey (PDF 720KB) by the US Securities and Exchange Commission in 2008 found that more than half of retail investors surveyed said they rarely, very rarely or never read company annual reports.
However, despite the persistent mounting evidence that investors seldom read the documents, companies continue to spend large amounts each year creating annual reports for both print and the web.
While there remains a need for a print and PDF audited annual corporate reference document, any investment in such a document for marketing communications purposes is wasted since they are seldom used. Companies would do better to reallocate resources to providing non-annual report web resources that target the needs of their various investors.
Other key findings from the RBC Direct Investing poll include that only 15% of online investor account holders invest for short-term goals while 46% invest only for the long-term and 39% invest for a combination of goals. Fully 73% of online investors have been investing for longer than three years and of these, 92% are 36 or older.
Top reasons for opening an online brokerage account include convenience (96%), to have control over investments (95%) to save on fees and commissions (92%) and to become a better educated investor (76%).
- What do you think? Has the time come to replace glossy print annual reports and non-PDF online versions with something new and relevant to the audience?