Personalised guidance can lead to better financial outcomes, according to research from the Association of British Insurers and Thinks Insight and Strategy’s behavioural team.
According to the findings, 76% of participants make a decision leading to a better financial outcome when guidance is personalised to their individual circumstances. This compares to 14% of people who made a good financial decision when seeing generic guidance based on existing regulations.
The research also revealed that customers may be more willing to pay for personalised guidance than generic guidance, with 46% of participants stating they would be happy to pay for guidance that offers tailored options presented in a helpful way, compared to 40% who would pay for generic guidance.
Personalised guidance also reduces the consumer need for additional information, from 56% down to 45%, potentially easing the decision-making process.
The ABI said the results strengthen the consumer case for financial providers to be able to offer personalised guidance and the FCA’s recent proposal for a targeted support regime.
Dr Yvonne Braun, director of long-term savings at the ABI, said: “Navigating the financial world can be confusing and it’s vital we do more to help people save, invest and make informed decisions when accessing their pensions. Our research clearly shows that customers can benefit from guidance tailored to their personal circumstances where it presents clear and relevant options to help decision making.
“This type of guidance should be enabled via the Government and FCA’s recent proposal for a targeted support regime, and we look forward to working further with Government and regulators to bring this regime to life.”
Max Mawby, founder of Thinks Applied Behavioural Science, added: “It is always delightful to see such clear results when you run an experiment. The results suggest that firms have the opportunity to deliver much better outcomes for their customers by personalising guidance, particularly when simple choice architecture is used to guide customers alongside more traditional text. We hope these results will support a productive conversation between industry and regulator about how to go even further to deliver great customer outcomes.”
