Who reads the fine print?

When we get a prospectus for a new investment, how many of us really read it from beginning to end? And if you do read it how much do you really understand? I have a friend who will never sign anything without reading every single word, he is a tax accountant, so I did a small case study on him and looked at all his investments then asked him a few questions. One of the questions was how much are you paying to your financial adviser. His answer was ... "on my super I don't have an adviser and with my managed funds I don't pay anything". I looked into his investments and on his super there was a trailing fee of 0.45% of his fund value every year to an adviser he had never heard of (later we tracked it down to his previous employer's adviser) and on his managed funds he was paying 0.6% to an adviser that he had met a few years ago to sort him out. Luckily he was not paying the entry fees... but still very interesting!

Alan Kohler wrote a commentary in the Business Spectator on 19 Feb 2008 and quoted an interesting fact

" ASIC’s deputy chairman Jeremy Cooper came out with the astounding revelation that 46 per cent of the population do not have the education to actually read and take in financial disclosure.

In my speech a bit later I observed that the other 54 per cent can’t be bothered reading the stuff either."

Read the full story as he also gives some other interesting statistics. http://www.businessspectator.com.au/bs.nsf/Article/Sales-disguised-as-advice-BXQSN?OpenDocument