August 10, 2015
I am firmly opposed to the proposed new regulation (new Rule 30e-3) which would eliminate the current default requirement for mutual funds to transmit important information to investors in paper form.
Investors are getting less and less information related to their investments, web tracking also shows that investors DO NOT actually go in the Asset management companies websites to download important information. When this is tracked we see fewer and fewer investors willing to put in the time To locate important documents, also many asset management companies websites don't make it easy some are very difficult to find a certain document.
Shareholder reports are one of the few documents Investors read, we sent out a survey to over 250,000 investors and the results show that though It's not difficult to opt in they prefer information to be delivered to them related to their investments, these reports are read more than one may think And it does deliver information about the investment they can understand, the financials are familiar to them and the portfolios are reviewed by investors. Its not like a definitive prospectus where the investor had to interoperate legal language. With the results we found these are read and Many investors take the time to review them. Will they actually now have to work to locate and download the document, facts show that few would.
At some point important information such as that found in a financial report should be delivered to the investor. It's one of the few documents they Actually receive that helps them understand the investment, for the small cost per investor it makes sense to deliver it to them, as facts are proving that investors even if they decide to opt out will not actually take the time to locate this document and facts show they do this less and less to the point They don't do it at all. That's not what we should be asking investors to do, but we do and I don't think investors give this the proper thinking at the opt in or opt out points. Behavior will change and investors will eventually stop looking for these documents completely. I do believe asset management companies have fiduciary responsibility to make this easy on the investor and send them a document via usps as its done now. When you consider how different it is with asset management companies on how an investor must locate a document you can see it differs and isn't the same between asset management companies on how these documents are buried in their websites or how email technology has changed that can make it difficult for a link to work properly and based on how an investor applies settings that it gets delivered at all.
I feel not enough study has gone into investor behavior among other things for this to be considered. Investors at the least should get financial reports mailed to them. Underperforming asset management companies can take advantage of this behavior because they know and can see the trends on how investors will not search out the document therefore creates less concern on their parts that an investor would even see something that may otherwise standout or at least put them in a position to question something anything related to their investment. Though the industry may know that a certain percentage of investors will opt out they know even a less amount the very few will actually go looking for the document.
At some point an asset management company should be required to mail a document like a shareholder report as it makes it easy for investors To review and question their investment, take that away and very few will. That is just not the best fiduciary goal. As an investor I can say I don't want to have to go work to find information from a financial company I trusted my investment too, I would prefer it gets delivered to me And I'm sure many investors would think the same way. When they are given the choice to opt in or opt out as financial industry experts we should Do whats best for our clients. Not make them figure out the best way, many don't even understand what it means to opt in. We have the responsibility To manage their money why would we not take the responsibility and just assume it's best to mail it to them.
Thank You for the chance to comment on this. It's a small fee to pay per investor to deliver information versus making the investor work to locate it or trust technology that not all have or use correctly to put a lot of trust into.
Richard J. Malacina
President & CEO
Investor Services