The Investment Funds Institute of Canada (IFIC) is moving ahead with its second phase of research into financial disclosure, exploring the possibility of improving investor understanding of fee and performance information through online and interactive tools.
Step 2 falls under the umbrella of its research on effective financial disclosure that will be run by Jeremy Burke from the University of Southern California and Oded Nov from New York University. The pair has conducted similar research for the Financial Industry Regulatory Authority in the United States.
“IFIC felt it was important to build on the insights gained from our first phase of behavioural economics research and explore more deeply other methods to improve investor comprehension,” said Paul Bourque, IFIC’s president and CEO. “It is our hope that the results can be used by firms to evaluate their own disclosure reports and practices.”
The first phase of research released in March identified behavioural barriers to understanding CRM2 disclosure statements and included specific tactics for addressing them. It noted a universal desire for fee performance disclosure to help retail investors understand their statements and make informed financial decisions.
Researchers in the new study will conduct a randomized controlled trial with 1,000 Canadian investors to assess the relative efficacy of online interactive disclosure compared with current CRM2 statements. The online statements are being developed in consultation with industry stakeholders.