And in terms of the past two months, clients made even more visits to this area of the chart when they were provided with a benchmark, regardless of whether returns were positive or negative.
“The availability of comparing portfolio performance with a benchmark, particularly during the latter stages of the year, appears to be very important for clients,” reads a report of the study co-authored by Williams.
“It is useful information for them when deciding whether to stay invested and affects their views on the future of their investments. However, paying too much attention to the benchmark and this region can lead to poor decisions.”
The addition of a benchmark also led participants to spend more time and make more fixations and visits to areas of the chart where more contextual information was provided, being the graph, the key, the past two months, and an information box summarising the past performance of the fund and benchmark.
In contrast, when no benchmark was visible, more time, more fixations and more visits were made to the Y axis that measured performance as a percentage.
Here, people are more inclined to focus on the absolute values of their return due to a lack of context often provided by the benchmark performance, the report says.
“Benchmarks and portfolio values are factual representations of what has actually happened, but they are presented without context of the client’s own financial objectives and whether or not their financial plan is ‘on track’,” it adds.
“This lack of context could lead to poor assumptions being made based on very recent performance. This could potentially lead to behaviours that investors’ future selves would come to regret, so an indication of whether or not a plan is on track, or a message in the area most viewed stating whether or not this is the case, may assist clients to understand the impact to them as individuals.”
While the study’s main aim was to explore differences in behaviour rather than test user experience, Williams says that changes have been made to Dynamic Planner’s charts based on the findings and other research.
Changes include emphasising the distinction between portfolio performance and the benchmark by differentiating the weight of the lines, and being able to extend and configure the period of past performance within charts.
“A longer time period can encourage clients to consider the history of performance, and reduces the perception of short-term volatility,” says Williams.
“The results also highlighted the need for reassurance and insights into whether a client is on track to meet their financial objectives, which has helped inform the design of [Dynamic Planner’s app] Tram.”
