Financial Communications Are Broken
A white paper by consumer investment site BoringMoney.co.uk, launched today, criticises current financial communications and offers up some suggested alternatives and improvements.
Consumer research confirms that:
When presented with cost disclosures, only 23% of fund investors could accurately work out what they would pay.
Only 9% of fund investors say they are happy with the communications they receive.
Just 31% of fund investors give themselves a confidence score of higher than 6 out of 10 when it comes to selecting a fund.
37% say their benchmark for investment funds is cash.
The report challenges the way in which fund information is presented to many investors who will buy on a platform. With the consensus view being that less is more for initial research and ongoing updates, Boring Money launches its “Fund Snapshot” which provides a quick, succinct overview of a particular fund, and is suitable for mobile.
With the Pensions Minister last week commenting that he is considering legislation to force pensions firms to produce simpler statements, there is growing support in the industry for shorter, simpler, better designed information being made available to consumers.
Boring Money’s MD Holly Mackay comments,
Fund factsheets are like the water stain on my ceiling. It’s ugly, I know it’s ugly, but I’ve looked at it so many times that I’ve stopped seeing it. Fund factsheets attempt to serve many masters but in fact serve none. We need to overhaul them, fit for the realities of today’s digital world.
Mackay has called for support from investment CEOs, but also challenges the regulator to respond. She concludes,
In a perfect world we might equate good disclosure with someone reading a lengthy jargon-packed PDF. But KIIDs are not being read. It’s time we really tackle the question – do we prefer consumers to be approximately right rather than perfectly wrong?
Our Financial Communications whitepaper
Fund factsheets attempt to serve many masters but in fact serve none. We need to overhaul them, fit for the realities of today’s digital world. In a perfect world we might equate good disclosure with someone reading a lengthy jargon-packed PDF. But KIIDs are not being read.
Our research whitepaper tackles the question – do we prefer consumers to be approximately right rather than perfectly wrong?
Notes to Editors:
This white paper can be downloaded at www.boringmoneybusiness.co.uk/research/research-reports-1/broken-comms/
Data for this report is taken from the following sources:
- An online survey conducted in Summer 2019 with more than 1,000 fund investors.
- An online panel with 15 investors to test existing disclosure documents from investment providers.
- A number of other surveys conducted over the last 12 months exploring what investors want from disclosure documents.
Charges question put to fund investors
Imagine you are given the following cost information about a fund. How much would you expect to pay in total for investing in this fund? This does not include any platform fees which may be charged separately to the cost of the fund.
- 0.6% - Ongoing Charges Figure (OCF)
- 0.45% - Annual Management Charge (AMC)
- 0.15% - Administration/custody charge
- 0.05% - Transactional costs
Base: 670 fund investors
For media enquires please contact:
Jamie Ovens, Boring Money
020 3871 2524
About Boring Money:
Boring Money is an independent research and content business which provides information, tips and Best Buys to consumers. The business conducts regular research with industry providers and consumers and looks at the developing DIY investment market from both the customer and provider perspective. Boring Money holds test accounts with over 25 providers and also holds regular focus groups and interviews with consumers to ensure regular input and feedback from the user perspective.
Founder Holly Mackay has worked in the investment industry for 20 years and is supported by a team of 10 researchers, analysts and marketing execs. Boring Money is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.