Bank sales representatives are doing a poor job of explaining to consumers the risks of buying investment products.

That's the conclusion of a recent telephone survey of 100 investment representatives at 20 of the largest banks in Atlanta, Boston, Chicago, Los Angeles, and New York.

The survey was conducted by Barry Leeds & Associates, a New York-based firm that monitors bank compliance programs. The firm employed "mystery shoppers" who called sales representatives pretending they were consumers interested in investment products.

Among the findings: only 55% of the callers were warned that investment products are not federally insured, and only 50% were told they could lose principal.

"It's troubling because clearly the sales process has started at that point and (representatives) should be making the proper disclosures," said Paul Lubin, an executive vice president at Leeds & Associates.

Most of the salespeople surveyed were reluctant to give information to callers because they felt it would be comparable to "a doctor trying to prescribe medicine to a sick person over the telephone," Mr. Lubin said.

Even so, more than 58% of the salespeople went as far as to recommend an investment product, despite the fact that 65% of that group did not ask the callers what their investment priorities were, and 62% did not ask them whether they were aware of the risks.

Mr. Lubin added that instead of giving the proper disclosure over the telephone, bank sales representatives were "fixating on getting the people in the door" of the bank. The majority of callers, 56%, were asked to set up appointments, and 43% were told to stop by a branch for more information.

Bank executives disputed the claims of the survey, saying that the banking industry as a whole was doing a good job of disclosing risk to consumers.

"Be it over the phone or in person, our policy would dictate that full and proper disclosure be made to customers," said Michael A. Johnson, a senior vice president at First Interstate Bancorp, Los Angeles.

Mr. Johnson added that it's a challenge to disclose all the information required by regulators over a telephone when many callers simply want quick answers to their questions.

Boston-based BayBanks Inc. thinks it has solved the problem. A recorded message greets callers to its investment hot line with a litany of disclosures before they even reach a sales representative. The message warns that the bank's proprietary Bay Funds are not federally insured deposits and that investors risk losing principal.

Consumers who call SunTrust Banks are encouraged to come into a branch to discuss their investment objectives, said Henry Booth, head of retail brokerage services for the Atlanta company's lead bank.

SunTrust's investment sales representatives are not likely to make recommendations on investment products by telephone, he said. Adding, "Even if they did, it would be with so many caveats as to make the recommendation meaningless."

A spokesman for First Chicago Corp. said first-time investors are "rarely, if ever," given recommendations over the telephone because the banking company's sales representatives are required to profile all prospective customers first.

"It doesn't make sense for us to have a quick exchange with a person when our goal is to build the relationship with them," the spokesman said.

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