Just last week, the Investment Company Institute reported that more than 88 million individual shareholders now own mutual funds, up 6 percent from last year. Nearly three-quarters of plan balances were invested directly or indirectly in equity securities. These kinds of numbers tell us, as professional advisers, that most Americans don't have much room for error in their investment decisions. Tomorrow's retirees clearly need to accelerate their rate of investing in the equities markets today in order to achieve financial independence upon retirement. Let me make one other observation.
Most financial planners are strong advocates of portfolio diversification.
The risk of concentration in a single stock means that the average investor must rely even more on the integrity of a single company's audited financial statements. News stories, such as a recent one in the Wall Street Journal about the SEC investigating a Big 5 firm in connection with an alleged audit failure, is alarming to professional investment advisers. The response from the accounting side was that, quote, there's never been a case where an audit failure in any way related to non-audit services, and from the enforcement side that it's very difficult to prove a violation. Mr. Chairman, opponents of the Rule proposal nonetheless claim it is a solution in search of a problem. I can only tell you that the investing public can't afford the cost of an experiment that threatens the intent of the Independence Rule.