Why most fund investors are dissatisfied with their account statements?

Dalbar says that most fund investors are dissatisfied with their account statements for several basic reasons:

• The statement provides too much information. Although investors need complete data on their accounts, a fine line exists between comprehensiveness and overkill. When too much information appears on the account statement, an investor may feel overwhelmed. Fund companies are beginning to refine and improve their presentation of information by selectively eliminating less-useful data and by making the data they retain easier to read through intelligent design and use of graphics. For example, many funds now show an investor’s current asset allocation percentages using a pie chart rather than simply listing a set of numbers.
• The report requires investors to translate tricky mathematical terminology. For example, some fund companies provide statistics like “average cost per share” (a number that may be useful when calculating the taxes due on mutual fund shares you’ve sold), but they don’t describe how it was derived. This lack of information forces you to figure it out yourself. The best account statements explain the source and meaning of every number presented.
• The statement overestimates the investor’s knowledge. Fund companies often use language that the typical investor doesn’t understand. The best account statements include a brief glossary with definitions of technical terms.

When you invest in a new fund, study the first account statement carefully. Make sure that you understand every piece of data it includes. If you don’t, call the fund company’s information line and ask the representative to walk you through the statement, number by number. Jot down notes as you go. And don’t be afraid to ask “silly questions”! Having read this blog, you know more than the average investor, so your questions are probably not foolish at all. After all, your money is at stake here — you deserve to know exactly what it’s doing.