Research into presentation of risk and return to consumers The - PDF document

Research into presentation of risk and return to consumers The Association of British Insurers Contents 1. Summary ............................................................................................................... 5 1.1 Introduction ............................................................................................................ 5 1.2 Consumer context .................................................................................................. 5 1.3 Overview of presentation of risk and return ............................................................ 5 1.4 General commentary on design of disclosure document ........................................ 5 1.5 The alternative presentation approaches ............................................................... 6 1.5.1 No projections information (Template pages 1-2) ....................................................... 6 1.5.2 Following FCA guidelines and including projections information (Deterministic pages 1-3) .............................................................................................................................. 6 1.5.3 FCA guidelines and including enhanced information (inflation wording, warnings, graph) and projections information (Deterministic Plus pages 1-4) ............................ 7 1.5.4 Alternative approach including projections information (Stochastic pages 1-4) .......... 7 1.6 The view of advisors .............................................................................................. 8 2. Recommendations ................................................................................................. 9 2.1 Design/ look and feel.............................................................................................. 9 2.2 Information content ................................................................................................ 9 2.3 Presentation of projections information ................................................................ 10 3. Report by Strictly Financial................................................................................... 11 3.1 Regulatory Context .............................................................................................. 11 3.2 Research objectives and methodology ................................................................. 13 3.2.1 Research objectives .................................................................................................. 13 3.2.2 Method ....................................................................................................................... 14 3.3 Development of stimulus ...................................................................................... 16 4. Main findings ........................................................................................................ 18 4.1 General consumer attitudes and behaviours to investments ................................ 18 4.1.1 Summary ................................................................................................................... 18 4.1.2 Levels of knowledge and use of advice ..................................................................... 18 4.1.3 Common assumptions and mis-perceptions ............................................................. 21 4.1.4 Consumer understanding of risk................................................................................ 21 4.2 Generic learnings from the stimulus ..................................................................... 22 4.2.1 Summary ................................................................................................................... 22 4.2.2 Presentation of complex information ......................................................................... 22 4.2.3 Use of standard information ...................................................................................... 25 4.2.4 Section: Objectives and investment policy ............................................................... 27 4.2.5 Section: Risk and reward indicator ........................................................................... 29 4.2.6 Section: Charges ...................................................................................................... 31 4.2.7 Section: Past performance graph ............................................................................. 32 4.3 Inclusion of projection information ........................................................................ 34 Follow us on Twitter @BritishInsurers 2 abi.org.uk