Now You See It: Drawing Attention to Charges in the Asset Management Industry

Abstract

We carried out an experiment which simulated an online investment platform and recruited over one thousand non-advised investors to participate in the research. Drawing on the relevant behavioural literature as well as our own qualitative research we developed four treatments to test. In summary, all of our treatments increased the proportion of investors choosing a cheaper fund and some of the effects were sizable. However, the increased focus on charges did not seem to reduce the importance that participants placed on other fund characteristics such as performance or risk. A warning message appeared to improve decision-making, particularly when it was coupled with a chart showing the impact of charges or a screen providing a summary of charges just before an investor purchased a fund. The treatments which were most impactful were also prominently positioned on pages which all investors had to view.