Targeted Support more effective when tailored to consumer attitudes

Targeted Support is most effective when tailored to consumers’ attitudes, increasing investment by at least 30 per cent more than that achieved by demographic-based Targeted Support, a new study by TISA has revealed.

The research, which was also carried out by the University of Nottingham, found that aversion to risk, expectations of low returns and a preference for keeping money in the UK are deterring consumers from investing.

However, TISA reported that while all forms of Targeted Support increased investing behaviour, when recommendations were designed around these attitudes, it was materially more successful in encouraging retail investing.

Head of policy: consumer protection and access at TISA, Sophie Legrand-Green, commented:
“This research demonstrates that focusing on attitudes towards investing, rather than broad demographic assumptions, can give people the extra confidence boost to help them become investors.

“Evidence is clear that in the medium and long-term, investing often produces better financial outcomes than keeping money in cash. But people need the support and confidence to begin their investing journey, and attitudinal Targeted Support is one of the most effective ways to do this.”

TISA’s research, based on a controlled trial of 4,719 UK adults, was conducted in conjunction with Barclays, Lloyds Banking Group, and Vanguard.

It also found that attitude-based Targeted Support has a larger effect on groups less likely to invest, including women and new investors.

Attitude-based Targeted Support led to a 31 per cent increase in allocated investment for women compared with 16 per cent for men, and 53 per cent for those who had never previously invested compared with 14 per cent for existing investors.

TISA also reported that individuals with a UK home bias, who received a UK-preference-tailored recommendation, invested 47 per cent more than individuals with the same preference in the control group.

The majority followed the Targeted Support recommendation they received, and attitude-based recommendations were more likely to be followed than demographic-based recommendations. TISA said this could suggest consumers find recommendations more compelling when they reflect their own stated attitudes and preferences, rather than being based solely on demographic characteristics.

Professor of financial economics at the University of Nottingham, John Gathergood, added: “Targeted Support is the most important change in retail investing since the introduction of low-cost, widely accessible online investing.

“This research provides the first large-scale experimental evidence that tailoring investment recommendations to consumers' own attitudes can substantially raise the amount they will invest.”

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