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Personalised Guidance - Helping You Take Better Decisions

What is Personalised Guidance? 

Personalised guidance is the provision of information and support tailored to your behaviour, financial circumstances and/or demographic information. It helps your pension provider explain the consequences of decisions that you, as the customer, ultimately must take. 

It is different to the information and support your pension provider, investment platform or mutual society can provide you with to help you take financial decisions.

IMPORTANT - Under the current rules, your financial services provider is not able to offer tailored support. Information provided must be purely factual and generic.

Our Research Findings

We teamed up with Thinks Insight and Strategy to test the theory that personalised guidance can lead to more effective customer decision-making. 

The answer is a resounding yes. Personalising guidance can be very effective as long as it:

  • Limits the amount of information provided to the customer
  • Utilises design features, e.g. choice architecture
  • Highlights specific options/suggests a course of action

In our research, participants chose how much to withdraw from a hypothetical pension pot.

When provided with generic guidance on income tax implications, 14% of participants chose the correct option.

However, when given concise guidance highlighting a specific withdrawal amount based on the customer’s circumstances, 76% correctly withdrew enough to cover their immediate expenses but not so much that they unnecessarily paid a higher rate of tax.

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.    

We believe these findings are remarkable and very clear, strengthening the consumer case for the use of personalised guidance by financial services providers. This could be achieved via the FCA and HM Treasury’s recent ‘targeted support’ proposal as part of their ongoing Advice Guidance Boundary Review.

*  Prepared by Thinks.