SIA Provides Informative Material for Investors, and Their Reps

he Securities Industry Association (SIA) offers a considerable amount of informative material for investors at http://www.sia.com/publications/html/investor_topics.html. Much of it is free of charge and reps should encourage their customers to visit the SIA's website to obtain the publications.

But the material is valuable to reps too. Why? The material highlights basic information - historical data, concepts, tools, and so forth - which every rep needs to know, share with customers and practice, in order to avoid (or at least reduce) exposure to customer arbitration claims and regulatory disciplinary actions.

The list of topics is numerous, and includes some mundane topics such as, "Understanding Your Brokerage Account Statements." Reps should skip that one and focus upon four publications in particular. They are: "How to Read a Research Report"; "Investor Topics, Basics of Investing"; Understanding Market Risks, What Every Investor Should Know"; and Managing Your Expectations for Long-Term Success in the Stock Market."

Reps should have on hand multiple copies of "How to Read a Research Report" just to assist in answering all of their customers' inquiries in the latest research analyst debacles. Reps may chuckle (I know I did) in reading the statement, "Analysts strive to provide objective, informative reports that are written with investors' interests in mind." Overall, however, the publication is a good resource. The publication discusses the role that analysts play, what investors can learn from an analyst's report, what are ratings, and other resources to review in addition to analyst's reports.

The publication, "Investor Topics, Basics of Investing", is a 34-page overview. It starts with the famous Ibbotson Associates chart showing compound annual rates of return for the various asset classes since 1926. The publication addresses how to find an investment professional and includes, of course, the recommendation to review the rep's and the firm's professional records. There also is an interesting discussion of "Safety Nets", including SIPC coverage, and the "Characteristics of Equity Owned by Generation."

The publication, "Understanding Market Risks, What Every Investor Should Know", discusses market cycles. It promotes investing for the long term (because over time, risk falls). It promotes diversification. It recommends dollar cost averaging. The publication also employs some helpful tips for today's markets, including calculations as to how long it has taken for the stock market to rebound from a decline, as well as the lack of wisdom associated with market timing. The publication concludes with a pitch for investors to "get professional advice."

The final publication is "Managing Your Expectations for Long-Term Success in the Stock Market". This is a gem. Written by Jeremy Siegel of The Wharton School and author of Stocks for the Long Run, the publication is a "big picture" look at the stock market. Siegel notes that stock market returns from 1802 to 1998 were 8.5% (reps should consider that disclaimer next time they boast of the higher returns associated with shorter time frames). Siegel recommends some interesting courses of action. For example, his diversification recommendation includes diversification among different geographical areas. Likewise, his total return analysis urges one to consider the "power of dividends", noting that from 1929 to 1997, "the contribution of capital appreciation and dividends to total return was roughly equal, and the percentage contribution from dividends was even greater when measured on an inflation-adjusted basis."

This basic information effectively is a set of basic standards. Because the Securities Industry Association is promoting it as "expert" advice, reps will be held to those standards of care in their dealings with customers. So print these SIA publications. Share them with your customers, and make sure that you study them yourself.