Investors Pay Closer Attention after Enron

March 13, 2002 ( - Americans are paying more attention to their investments in the wake of the collapse of Enron by staying away from companies they don't understand, conducting more research, and diversifying more.

That was the conclusion of a new investor sentiment survey from Charles Schwab, which found that nearly three quarters of those polled have changed their investing ways.


  • 33% avoid companies they don’t understand,
  • 31% gather more research information,
  • 27% buy a wider range of investments for diversification purposes,
  • 22% admit listening more closely to a financial advisor, and
  • 15% say they worry more

Ongoing Habits

The Schwab survey also asked about investors’ ongoing habits.

A large majority of survey respondents, or 71%, believes they should review their 401(k) accounts at least every six months – yet only 61% actually do so.

And, while only 4% say there’s no need to ever review a 401(k) plan once it’s been set up, 15% admit they have never reviewed their own account.

When it comes to company stock – a central issue in the Enron case – a quarter of the respondents who listed company stock as one of their investment options, report that it accounts for 20% of the assets in their portfolios.

Schwab researchers said the 20% figure is troubling because it means those investors are beginning to have a portfolio that’s too concentrated on company stock, and therefore much riskier.

One in five respondents didn’t know how much company stock they hold, or even if it is a plan investment option.
The survey also revealed that 34% of respondents don’t know which companies constitute the largest stock holdings of their mutual funds. Another third have only “a general idea,” and just 21% are “very clear”.
The survey was conducted by telephone in February 2002, among 620 adults who reported they have a 401(k) plan.