It’s Time for Aunt Millie to Get Her Day

It may be time to think more seriously about the needs of one particular financial player, one enduring underdog in our investing public – one who goes by the name of “Aunt Millie.”

Aunt Millie is an unsophisticated investor with limited knowledge of complex financial products, under-informed and underrepresented in the regulatory labyrinth and looking for a secure retirement. She is, of course, imaginary. Real-life versions of Aunt Millie exist in many of our families, but she also lurks in the advocacy-minded imagination of U.S. Securities and Exchange Commission Chairman Elisse Walter.

As controversial topics such as executive compensation and board diversity, along with reports of shaky returns, continue to make headlines, it might be wise for firms to pre-emptively consider the needs of Aunt Millie and shift a little attention on that good faith effort to help keep their brand thriving.

Walter spoke recently before the Investor Advisory Committee, a body created under the Dodd-Frank Act to inform the SEC of initiatives that help investors and steer it away from ones that threaten their protections.

“Now, as dear to me as she is, Aunt Millie is no hedge fund manager. So when she sits down with her financial professional and the talk turns to [exchange-traded funds] and target date funds, crowdfunding or her professional’s fees, I want the SEC’s presence to be felt there in that office — whether or not she even knows anything about the SEC…I want the SEC to be there looking out for her, helping her make sense of the environment in which she is investing her future security,” she told the members.

Some highlights from the meeting? Beefing up the SEC’s internal knowledge by hiring industry experts continues to be a priority, she said. And, much of regulators’ focus now is on technology, including filling any data gaps and finding ways to ensure that proper controls are in place to not only prevent errors from happening, but promptly and efficiently correct them when they do. Aunt Millie, Walter told the committee, needs the ability to make better use of user-friendly, individually accessible technological tools.

Walter added that she has long been irritated by two-tier disclosure systems where sophisticated investors get more information than “little people,” and there is a need to develop tools to guide those who are less informed but desire layered disclosure in an accessible and understandable format.

She said the SEC is paying close attention to the confusion retail investors have when it comes to how to get financial advice, whether it’s from paid advisors or brokers, and the need to ensure that products and strategies are always recommended in the best interests of the investor.

The idea is to give retail investors more visibility and see that they are being fairly represented in the midst of a major transformation in the markets. And Aunt Millie, with the modest portfolio and plans for some family fun during her golden years, as Walter describes, will feel like the valuable stakeholder that she is. Firms might be well served to consider the importance of marketing to Aunt Millie and communicating the value of their services with the committee’s agenda in mind.