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State Board Report

September 2012

The kinds of information that investors find useful in making their investment decisions are identified in a study released by the Securities and Exchange Commission on August 30, 2012, entitled “SEC Staff Study Regarding Financial Literacy Among Investors.” The study was mandated by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The report covers online survey research, focus group research, public comments to the SEC and a Library of Congress review of studies of financial literacy among U.S. investors.

Investors reported information that they found useful included: information about fees, investment objectives, performance, strategy, and risks of an investment product, as well as the financial adviser’s professional background, disciplinary history and conflicts of interest. All of this information to be provided before the investment is made, rather than after. The investors also prefer having investment disclosures presented in a visual format that uses bullets, charts and graphs.

Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy, said, “From methods to improve disclosures to best practices for investor education programs, the study addresses a wide range of areas related to investor literacy.” The report can be found on www.sec.gov.

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