The Effects of Knowledge, Gender, and Age on the Comprehension of Investment Disclosures

Abstract

This study examines how investors comprehend the disclosures regarding investment fees about a mutual fund through various factors: gender, age, education, and knowledge about investing in mutual funds. The results reveal that gender and knowledge influence investors’ perception of understanding investment disclosures, whereas knowledge, education, and age influence investors’ actual comprehension of the disclosures. In particular, age has an inverse effect on investors’ actual comprehension of the disclosures. Male investors may be overconfident in their ability to understand investment disclosures, whereas an educated and informed investor provides the best defense against costly mistakes in investing. Implications for wealth advisors are included.

TOPICS: Wealth management, in wealth management, legal/regulatory/public policy, mutual funds/passive investing/indexing