Education Not Helping Investor Results
By: Brendan Magee
Here is one of the conclusions of 2014's Dalbar Report, Qualitative Analysis of Investor Behavior, "Attempts to correct irrational investor behavior through education have proved futile. The belief that investors will make prudent decisions after education and disclosure has been totally discredited. Instead of teaching financial professionals should look to implement practices that influence the investor's focus and expectations in ways that lead to more prudent investment decisions."
These findings are backed up by the results of stock fund investors returns as compared to their benchmarks. Over a 20 year period the average stock investor's returns were an annualized 5.02% while the S&P 500 did an annualized 9.22%. The findings even showed that when investors did well, their results lagged behind the benchmark. In 2014 the average stock fund investor did 25.54% as compared to the S&P 500 which did 32.41%
Now if you did a Google search of the word investing, millions of pages of information and education would appear on your computer screen. So the question is this, if massive amounts of investor educational material is readily available and it is not having a positive impact on the results investors are achieving, why is it continually distributed to investors?
First one who responds with a good answer to this question wins a gift card to their choice, Starbucks or Dunkin Donuts!
Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e-mail Brendan@coachgee.com or call 610-446-4322
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