Professors Richard Hyde and John Gathergood of INFINITY recently presented their research findings at TISA's Inclusive Investing Conference

How do risk warnings impact investment choice

Prof John Gathergood presented his findings on how risk warnings impact investment choices.

The findings of this research are striking: if you can help people to better understand the risks of investing in stocks and funds, they are more likely to invest. This is because many individuals perceive the probability of making losses from equities to be higher than it often is. Improved messaging can help. In this study, highlighting the higher returns that can be achieved over time from mainstream investing leads to a c.14% increase in the amount invested.

The balanced risk warnings they formulated and tested provide context and draw attention to the historically higher potential returns offered by stocks, shares and funds when invested over longer periods of time.

For more information on the project "How do risk warnings impact investment choice," download the PDF.

Making sense of Stocks & Shares ISAs

Prof Richard Hyde presented results on digital prototypes on the ways to present Key Features Documents (KFDs) for Stocks & Shares ISAs.

Legal and regulatory communications designed to help consumers aren’t doing their job. This isn’t new news. The FCA has challenged firms to improve their communications and design with the consumer in mind. The Consumer Duty is in motion. Nevertheless, the FCA’s own regulations and firms’ risk appetite mean that consumers are still being presented with reams of text and complex jargon.

In response, TISA has worked with its members and the University of Nottingham and Amplified Global to design and test three Key Features Documents (KFD). UX and functional design support for the Key Features Document (KFD) prototype was provided by EY-Seren. Each KFD was increasingly shortened and simplified:

An Original KFD, considered compliant with regulatory requirements, pre-Consumer Duty (4,149 words),
A Simplified KFD, considered compliant with regulatory requirements following the introduction of the Consumer Duty (2,131 words),
And a Digital KFD, not fully compliant but based on what TISA members think consumers should know when investing (full text: 1,289 words; main screens only: 592 words).

For more information on the “Making sense of Stocks & Shares ISAs” report, download the PDF.

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