A client going through an aging parent’s financial documents asked me today about what to do with all of the annual reports and prospectuses that the parent had received over the past several years. That question did not have me scratching my head for long: put them in recycling and please the person who gathers the paper for reuse. That is much better than sticking them in a landfill or saving them in a corner of the basement or attic.
The question made me think about the incessant flow of paper from companies to their shareholders and investors and others. Under the guise of protecting us, millions of dollars (not to mention trees) are sacrificed for information which (a) will not be read, (b) will not be understood, (c) will not be completely accurate, (d) will cost a small fortune to prepare and send…you get the picture. The folks who really need copies of these items are those who will plow through the documents in order to (a) make investment decisions and recommendations, primarily for others, (b) hopefully find the basis for a lawsuit by which they can profit, (c) are collectors of this type of information, or (d) are the regulators who required the creation and dissemination of these materials in the first place. Nowhere in the list of folks who NEED copies of this information will you find the ones the requirement was ostensibly intended to protect.
The business of creating and providing this information does, however, fund a lot of government and private sector jobs, so we cannot be too harsh in our judgment of its relative worth. And to be fair, many items are available (and equally ignored) electronically and do not involve a paper pile up for the investor. The thing is, of course, that most people, having made the decision to purchase the particular investment, did not base it on the prospectus or report and will not base their decision to sell on those items they periodically receive, either. Perhaps it is better to require a simple notice of the availability of such information and require, in return, an acknowledgement. It could be simple to accomplish this with a postcard or e-mail or other similar approach. A side benefit would be the sidestepping of the natural tendency of folks to stash that paperwork for “later”; only the recycler would be disappointed.