Information overhaul: Making investment data more accessible

  • Understand how data is currently presented on advised products
  • Consider the different ways to present this
  • Learn about recent industry initiatives on this front
Information overhaul: Making investment data more accessible

Advisers have long been obliged to retain a substantial amount of knowledge about financial products. But the same expectations do not apply to prospective clients, with many individuals appearing to lack even a basic sense of financial literacy.

Research from UCL Institute of Education and the University of Cambridge, published earlier this year, found that one in three adults in England and Northern Ireland could not work out the correct change from a shopping trip. Four in 10 failed to correctly apply a simple discount to an everyday household product they might buy.

Visual presentations appeared to pose an even bigger problem, with half of respondents unable to interpret a graph containing basic financial information.

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All this suggests that those working in financial services face a daunting task when it comes to explaining the likes of investments and other financial products to existing and prospective clients. The way in which this data is presented, as well as the type of language used in relation to it, therefore plays an important role.

The current situation is clearly far from ideal: products such as funds are accompanied by a significant mass of literature and information. Many believe this can be a source of confusion for clients.

Andy Agathangelou, founding chair of industry body Transparency Task Force, says: “We are all about encouraging the financial services industry to provide more relevant information, but that in itself doesn’t achieve very much. Transparency alone will just create a snowstorm of data and make things worse.”

He says the idea of giving users rafts of information will cause further problems: “The industry challenge is how to provide information in a clear, intelligible and decision-ready manner.” 

Changes are due, with demographics and cultural shifts likely to drive fresh attempts at improvement. But opinions vary on how to navigate the best way forward, and specialists believe a more joined-up approach is needed from the industry.

On the horizon

Nowadays, the use of data in client communications faces much greater scrutiny, particularly from regulators. The FCA launched its Smarter Consumer Communications initiative in October 2016, and subsequent work has taken this kind of consideration into account. Its asset management market study will force fund providers to assess whether their products offer value for money and explain their conclusions to buyers. 

Providers will also be tasked with communicating fund objectives more clearly. The watchdog is now examining the level of competition and transparency in the platform space.

Meanwhile, the rise of new technology, and the emergence of a millennial customer base used to digital offerings, has also increased expectations about how investments are presented and communicated to clients.

The CFA Institute recently noted that trust levels among investors, both retail and institutional, had improved since 2016. A study published by the organisation found that younger investors tended to have greater faith: 55 per cent of those aged 25 to 34 trusted the financial services industry, compared with 49 per cent of 35 to 44-year-olds and 35 per cent of those aged 45 to 54 (see Chart 1).