Our research findings
We teamed up with Thinks Insight and Strategy to test the theory that personalised guidance can lead to more effective customer decision-making.
The answer is a resounding yes. Personalising guidance can be very effective as long as it:
- limits the amount of information provided to the customer
- utilises design features, e.g. choice architecture
- highlights specific options/suggests a course of action
Participants chose how much to withdraw from a hypothetical pension pot
When provided with generic guidance on income tax implications
14%
of participants chose the correct option.
Source: Thinks Insight and Strategy reportHowever, when given concise guidance highlighting a specific withdrawal amount based on the customer’s circumstances,
76%
correctly withdrew enough to cover their immediate expenses but not so much that they unnecessarily paid a higher rate of tax.
Source: Thinks Insight and Strategy reportThe research also revealed that customers may be more willing to pay for personalised guidance than generic guidance.
40%
of participants said they would pay for generic guidance.
Source: Thinks Insight and Strategy reportSeeing personalised guidance also reduced the participants’ stated need to seek out additional information, from 56% down to
45%
potentially easing the decision-making process.
Source: Thinks Insight and Strategy reportThis figure increases to
46%
for personalised guidance that offers tailored options presented in a helpful way.
Source: Thinks Insight and Strategy report
FAQs
What personal information could providers utilise?
The relevant information could include:
- customer behaviour e.g. usage patterns on an investment platform
- customer objectives, intentions and preferences
- financial circumstances e.g. income, benefits, asset
- demographic information e.g. age and gender
Will personalised guidance tell customers what to do?
No, personalised guidance will not constitute a tailored recommendation. Instead, it will suggest what a customer ought to consider doing, highlight aspects of a product relevant to a customer’s circumstances, and limit the range of options available to customers.
Can my financial service provider offer personalised guidance now?
No, information provided by your financial services provider must currently be purely factual and generic.
