Welcome to part 3 of our series on how fund managers can help investors make better investment decisions. This time, as promised, we’ll be investigating choice architecture, with the help of the digital camera.
According to Wikipedia, choice architecture describes the way in which decisions are influenced by how the choices are presented.
Take fake flies, for example.
By placing fake flies in the urinals, officials at Amsterdam airport managed to reduce “spillage” by 80 per cent – a pretty impressive result for a simple sticker.
When the fly’s creator, Doug Kempel, set out on his mission “to save the world one urinal at a time” he realized something important… that urinal users are humans who make a huge number of choices each day, gently nudged, influenced and encouraged by all sorts of subtle cues that affect decision making.
Understanding those cues and finding ways to nudge investors towards better choices can be a powerful tool that helps fund marketers attract or retain asset so here are three ways to help clients make better decisions… courtesy of the digital camera and some more pertinent examples from J.P. Morgan Asset Management.
As easy or as complicated as you want
Like its cousin, the iPad, the digital camera is a great example of a tool that can do vastly different things depending on who’s using it.
Put a digital camera in the hands of a professional photographer and you’ll get stunning results. By combining expert knowledge about light or picture composition with the high-tech capabilities of the digital camera, photographs that would be impossible to produce using an analogue camera can be churned out effortlessly.
Put that very same camera in the hands of a two year old and you’re unlikely to capture an amazing sunset. But you will, most likely, end up with some half decent photographs of whatever two year olds find fascinating.
Whilst the two year old can simply “press and go” the expert can tweak settings to their heart’s content. And one doesn’t interfere with the other, the expert isn’t insulted that a two year old can use the camera and the two year old doesn’t get stuck in tricky options that prevent an actual photograph from being complicated.
People who design digital cameras have thought carefully about the whole spectrum of people likely to use their product and come up with a design that can work – at different levels – for everybody.
And that’s really what every good fund website should be able to do.
Using clear signposting and differentiated entry levels, fund marketers should make it easy for investors to gravitate towards content that matches their level of knowledge and expertise.
In this example, it’s easy for clients to pitch themselves in at the right level.
Relatively in-experienced investors might want to begin by viewing the top-selling funds – it’s a phenomenon called collaborative filtering (in other words seeing what people like you usually do or think) and we all use it to help use make decisions.
More sophisticated clients might opt straight for “design your own” and for everyone, there’s always a “need help?” call to action within easy reach.
Make things as intuitive as possible
When digital cameras first entered the market, they failed on one basic – but pretty crucial – level. Nobody knew if a picture had been taken.
The public had grown used to the sound of a shutter clicking and it turned out that they missed that reassurance that the picture they wanted to take had been captured.
The result… these days, most digital cameras make a sound when a picture is taken, not because they need to but because it makes intuitive sense to the users.
Fund websites need to be designed with similar levels of intuition in mind.
Consumers mainly deal with retail websites or get their news from mainstream media channels. As a consequence, they become used to consuming information or browsing products in a certain way.
When they come to a financial website, they bring that history with them and intuitively expect a similarly slick user experience. Never mind that financial products are different or that financial news is a little more complex, to customers they’re simply buying products and reading updates.
Make things as easy and as intuitive as you can.
Every time an investor has to pause and wonder what to press or where to go next is a potential drop off point.
Every time they have to scratch their heads over a difficult question that can’t be answered there and then with the information they have to hand is a point at which you’re likely to lose their custom.
J.P.Morgan make it simple to toggle between levels of detail, with simple clicks displaying performance charts like this:
From there, it’s easy to compare products – just as you might on a retail website – or add them to your cart to checkout:
If you’re too close to your products, or too emotionally involved in your fund website to view things objectively, call in a UX expert… you won’t be disappointed.
Digital cameras have vastly improved the quality of amateur photography.
Whilst some of that improvement is down to superior technology, most of it stems from the fact that digital cameras offer instant feedback.
By looking at the back of your camera you can get a pretty good idea of the quality of the photograph you’ve just taken. That feedback gives you the chance to try again, adjusting things until you’re entirely happy with the result.
Of course, when it comes to printing out the picture, there may be slight differences, small things you failed to spot, but broadly, the result will be on track with your expectations and you’ll be satisfied.
Customers need feedback, too.
At the buying stage, that feedback might relate to fund choice:
- How do you alert clients who’ve input “unusual” data?
- Do you sense check choices before confirming them?
- Can clients check what other clients like them have done?
- Do you extrapolate current decisions into future outcomes?
And later on, client reporting takes on the mantle for providing regular and timely feedback on how investments are performing.
This feedback loop is a golden opportunity to help nudge your clients into better decisions – decisions that simultaneously improve their financial health and increase your asset flow.
For more ideas on how to leverage client reporting technology to take your feedback to the next level, download our latest white paper.