Special Notice – FINRA Requests Comment on Effective Methods to Educate Newer Investors APES NEEDED FOR COMMENTS!!!


Action Requested

FINRA encourages all interested parties to comment on the Special Notice. The comment period ends August 30, 2021. Comments must be submitted through one of the following methods:

  • online using FINRA’s comment form for this Notice;
  • emailing comments to [email protected]; or
  • mailing comments in hard copy to:

Jennifer Piorko Mitchell Office of the Corporate Secretary FINRA 1735 K Street, NW Washington, DC 20006-1506

To help FINRA process comments more efficiently, persons should use only one method to comment on the Special Notice.

Important Notes: All comments received in response to this Special Notice will be made available to the public on the FINRA website. In general, comments will be posted as they are received.

Background and Discussion

FINRA and the FINRA Foundation have long provided free, unbiased information and tools to help retail investors protect themselves and better understand basic principles of investing and the markets. These resources range from plain-language content on FINRA’s website that explains emerging products, popular strategies and current market trends to interactive tools.2 They also include a series of online micro-courses,3 optimized for mobile technology, that cover essential topics for new investors—from setting investment goals to understanding risk and return. We reach retail financial consumers in a variety of ways, including:

  • direct engagement, both in-person and virtual;
  • digital channels such as websites, podcasts, videos, apps, and both casual and immersive games;
  • collaboration with broker-dealers and nonprofit networks;
  • training of academic or nonprofit intermediaries who have touchpoints with key audience segments; and
  • distribution through FINRA and FINRA Foundation channels and through paid and earned marketing campaigns, all of which leverage traditional and social media platforms.

The FINRA Foundation also undertakes and sponsors research to better understand investor behavior, attitudes, knowledge and preferences. For example, a recent collaboration4 with the National Opinion Research Center (NORC) at the University of Chicago revealed useful insights about new investors—meaning people who opened a non-retirement investment account for the first time during 2020. The study explored their characteristics, motivations, the types of accounts they opened and their investment knowledge and practices. Among other findings, we learned:

  • The majority of new investors were under the age of 45, had lower incomes, held smaller account balances and were more racially and ethnically diverse than investors who already owned taxable investment accounts prior to 2020—people the researchers described as either experienced or holdover investors.
  • New investors typically had less investment knowledge when compared to other investors—according to both their own assessments and objective measurements. For example, new investors on average could correctly answer only 1.4 out of 5 investment knowledge questions.

Nearly half (48 percent) of new investors reported accessing their accounts primarily through a mobile app.

  • While all investors reported relying on a variety of information sources when making financial decisions, differences emerged by experience level. New investors were most likely to seek information from friends, colleagues or family members instead of from financial professionals or personal research.

Request for Comments

As the related fields of financial wellness and investor education evolve, FINRA and the FINRA Foundation periodically reassess where to focus attention and how best to allocate and deploy their financial and human capital resources. This involves striking a balance between developing innovative strategies on one hand and figuring out how to reach people using existing strategies on the other. It also involves conducting or sponsoring research to benchmark and track investor behaviors, attitudes and knowledge and to determine which strategies work well for promoting informed decision making among various subsets of the population.

Given the recent influx of novice retail investors into U.S. securities markets coupled with rapid advancements in technology, FINRA requests comments from firms, investors, investor advocates, academics, investor and financial education providers (for-profit and nonprofit) and other stakeholders concerning effective ways to reach today’s investors. We are especially interested in comments pertaining to younger, novice investors and people who have yet to participate in investing outside an employer-sponsored retirement plan.

In particular, we request comments on the following questions:

  1. What is the single most neglected area in the field of investor education? How might this area be developed?
  2. Which methods of educating investors have worked best to increase investor knowledge among self-directed retail investors? Please describe the modes and channels used to reach people and the demographic characteristics of the target audience for such efforts. What should be FINRA’s role with regard to educating self-directed investors?
  3. Which education methods have worked best among investors who receive advice from registered financial professionals? Please describe the modes and channels used to reach people and the demographic characteristics of the target audience for such efforts. What should be FINRA’s role with regard to educating investors who receive recommendations from registered financial professionals?
  4. What types of effective educational interventions have the highest potential to influence the behavior of investors, particularly newer investors? What are the costs of implementing such interventions?
  5. What metrics do you use to track the results of educational interventions? To what extent do these results change over time?
  6. What experience and evidence of effectiveness can you share regarding the integration of investor education into other types of service delivery (such as workforce development, general financial planning or client cultivation)?
  7. What lessons have been learned from qualitative or quantitative study of target audiences, input from behavioral science professionals, data analytics or other inputs regarding effective ways to educate investors generally and newer investors specifically?
  8. Does simulated trading help educate investors or potential investors about different aspects of investing, such as risk, diversification, costs and performance?
  9. For broker-dealers and other financial services firms that offer investor education resources through mobile apps or websites, what has been your experience regarding customer usage of the tools and information you offer? Which platforms and modalities have the highest utilization? Which have been most effective? Have you measured changes in investor knowledge? If so, how and with what results?
  10. How might FINRA and the FINRA Foundation best serve the field of investor education?

TL:DR - Another opportunity for Ape's voices to be heard!

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