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Disclosure may not be enough

• Disclosure, particularly disclosure used in isolation, may not provide sufficient support in helping investors make more informed decisions.

In the financial services market, financial service providers often have better information about the quality, features, fees, risks, and benefits of their products or services than consumers. In a market with this type of asymmetric information, disclosure is an often-used policy tool designed to increase transparency and provide consumers with valuable information to make informed decisions. We define disclosure as a statement that provides relevant information to consumers for informed decisionmaking. A disclosure often reveals estimated costs and impacts to consumers, commitments of the relevant parties, existence of any conflicts of interest, and the nature of the relationship between parties. In this report, we review the literature on consumer disclosures in the financial industry. The primary focus of the review is on disclosures of conflicts of interest, particularly with regard to financial advice, but we also examine use of disclosure associated with other common financial products or services, including credit cards, mortgages, and mutual funds.

• Chapter One

  Introduction

• Chapter Two

  Use of Disclosures of Conflicts of Interest in the Financial Industry

• Chapter Three

  Effectiveness of Disclosures of Conflicts of Interest

• Chapter Four

  Effectiveness of Other Disclosures in the Financial Services Industry

• Chapter Five

  Best Practices in Designing Effective Disclosures

• Chapter Six

  Summary