We are the voice of insurance and long-term savings | Contact us

New research shows that personalising guidance can significantly improve financial decision making

Personalised Guidance Advice.jpg

  • In our experiment, 76% of participants make a decision leading to a better financial outcome when guidance is ‘personalised’ to an individual’s circumstances.
  • This compares to 14% of participants who made a good financial decision when seeing generic guidance based on existing regulations.
  • The research also found that customers may be more willing to pay for guidance that personalises information and is presented in a way that is tailored to their circumstances.
  • Personalised guidance can help people to make effective, timely and informed decisions – a key Consumer Duty requirement.

When guidance is tailored to an individuals’ circumstances and presents clear, relevant options, consumers will make better financial decisions according to new research from the Association of British Insurers (ABI) and Thinks Insight and Strategy’s Behavioural Team. Customers are struggling to make crucial decisions about their savings, investments and pensions without regulated financial advice. And current rules restrict firms from providing guidance tailored to an individual’s circumstances.

Teaming up with Thinks Insight and Strategy’s Behavioural Team, we wanted to test the impact of ‘personalised’ guidance to improve financial decision making. In an experimental setting, we asked participants to choose how much to withdraw from a hypothetical pension pot. The experiment revealed that generic guidance can only go so far, with only 14% of participants able to make a decision that would leave them better off. This figure rose to 76% for participants who received personalised guidance which highlighted a course of action (in this case, a specific withdrawal amount to avoid higher rate tax) and provided helpful prompts about the decision.

The 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. This figure increases to 46% for personalised guidance that offers tailored options presented in a helpful way. Seeing personalised guidance also reduced the participants’ stated need to seek out additional information, from 56% down to 45%, potentially easing the decision-making process.

Our results strengthen the consumer case for financial service providers being able to offer personalised guidance and add weight to the Government and FCA’s recent proposal for a targeted support regime - where firms would be able to use limited personal information about a customer and their circumstances to provide more helpful support.

Dr Yvonne Braun, Director of Long-Term Savings at the ABI, said:

YvonneBraun240x273.jpg‘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 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 do a lot of work helping firms deliver good outcomes to comply with the FCA

Consumer Duty – we hope these results will support a productive conversation between industry and regulator about how to go even further to deliver great customer outcomes.’

Sir Steve Webb, partner at LCP and former pensions minister, said:

‘This is vitally important research, measuring and demonstrating the potential benefit to consumers of being offered personalised guidance. We already have a world in which savers have complex choices to make at retirement, and the government is also consulting on giving them additional choices about how and where they build up their pension pot. But extra choice can cause confusion and lead to poor outcomes if savers are not helped to navigate these choices. Regulations should make it clear that providers can use information which they hold about savers to offer guidance which is personalised and presented in a way that helps people to make good choices.’

Notes to editors

  • Personalised guidance is the provision of information and support, tailored to an individual customer, based on data the provider holds on the customer.
  • Advice rules restrict pension providers, mutual societies and investment platforms from offering guidance beyond that which is generic and purely factual to non-advised customers.
  • The ABI commissioned the Behavioural Team at Thinks Insight and Strategy to:
    • Identify the key decumulation decisions where personalised guidance could be helpful, and that could be tested in an experiment.
    • Conduct qualitative research with twelve people in the UK to understand their approach to decumulation decision-making.
    • Run an online randomised controlled trial (RCT) with over 3,000 participants aged 55-66.
  • The Advice Guidance Boundary Review is a joint initiative from HM Treasury and the FCA. They recently published a policy paper which included proposals to tackle the advice gap. One of these is a targeted support regime, which would enable firms to use limited personal information about a customer and their circumstances to provide better support.

About Us

The ABI is the voice of the UK’s world-leading insurance and long-term savings industry, which is the largest sector in Europe and the third largest in the world. We represent more than 300 firms within our membership, including most household names and specialist providers, providing peace of mind to customers across the UK.

We are a purpose-led organisation: Together, driving change to protect and build a thriving society. On behalf of our members, we work closely with the UK’s governments, HM Treasury, regulators, consumer organisations and NGOs, to help ensure that our industry is trusted by customers, is invested in people and planet, and can drive growth and innovation through an effective market.

A productive and inclusive sector, our industry supports towns and cities across Britain in building a balanced and innovative economy, employing over 300,000 individuals in high-skilled, lifelong careers, two-thirds of whom are outside of London. Our members manage investments of £1.5 trillion, pay over £17.2 billion in taxes to the Government and support communities and businesses across the UK.


For more information, please contact the Press Office.

Last updated 14/12/2023