Investors Hunger For Greater Transparency On Bonds, Schwab Study Says Hot

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Highlights of the study:

  • Bond investors are confused about what investment firms charge to buy or sell individual bonds.  
  • Seventy-three percent say it’s “extremely important” to know how their firm is compensated.
  •  Twenty-four percent don’t know how their bond firm is compensated.
  •  Half say understanding the mark-ups and fees is “extremely important.”
  •  Forty-four percent of investors who say they pay a mark-up don’t know what it is.
  • The perceived average mark-up on a $1,000 bond is $6.10.
  •  Two-thirds say it’s “extremely important” they receive competitive pricing on bonds.
  •  A majority know that bond prices vary across firms.
  •  Only 35 percent believe they always get the best price from their firms.
  •  Forty percent do not know how to get the best price.
  •  Roughly 40 percent say it’s too time-consuming or too complicated to shop for the best price.

 

The online survey, conducted by Koski Research in September 2011, was completed by 510 individual investors in the U.S. with a minimum of $250,000 in total investable assets and at least $25,000 in bonds that were purchased within the past two years. These bond holders were fairly affluent, with an average of $486,000 invested in individual bonds, and an average of $1.8 million in household savings and investable assets.

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