The final FCA Asset Management Review report has set off all manner debate about charges, closest trackers and more.

At Space, we always like to listen to these big debates, which can translate into all manner of new rules and initiatives which eventually impact our clients.

Yet in recent years, as the FCA has upped its research game on research, we often find ancillary work accompanying the big reports and which give us immediate food for thought.

Our interest was certainly piqued when the review also looked at six days worth of investor journeys on an unnamed platform producing a ‘rich dataset’ involving millions of customer interactions. (It is included in a little box on page 26 of the 114 page report)

The regulator, being the regulator, is most interested in charges and how often investors and potential investors check the fund management charges as can be seen from some of the conclusions we have extracted below.

Of all the visits to the website to look at funds, fewer than 9% looked at charges. Under 3% look at documents (including the KID)

On average, when customers engage with charges, they do so for longer than when they also look on other pages. They spend just over 60 seconds on charge-related pages and 43 seconds on non-charge related pages per visit.
A strong indicator of engagement with charges is when customers sort lists of funds by charge, which would show that they wish to minimise charges. Customers only do this during 0.1% of visits.

Customers are slightly more likely to enagage with charges towards the end of a visit rather than at the start.

As a percentage of time spent across all customers, the majority of time was on the account and portfolio summaries (about 25%) and factsheet landing pages (over 10%).  

Out of all visits where clients buy funds, 17% engage with fees. Out of visits where clients buy passive funds, 21% engage with fees.

The regulator also looked at ‘typical paths’ taken through the website to get to the fund fact sheet landing pages and categorised fund buyers into three types – reviewers, choosers and searchers. Here are the regulator’s definitions.

1. ‘Reviewers’ – These are customers who mostly go to the website to check their existing investments. They start in their portfolio summary and then go and look at funds.

2. ‘Choosers’ – These are customers that use recommendation lists to navigate to the factsheet landing page.

3. ‘Searchers’ – These are customers that use keyword searches internally from the website or externally from search engines in order to find funds.

The report also comes to the following conclusions about these types though we are mostly looking at charges again.

‘Choosers’ and ‘searchers’ pay more attention to charge information than ‘reviewers’ and are more likely to buy funds than ‘reviewers’. They make up 18 and 19% of (fund related) visits respectively.

‘Choosers’ and ‘searchers’ also tend to buy cheaper funds. Of the ‘choosers’, those who choose from the Index tracker list are most likely to view platform charges.

For choosers this is partly because they are more likely to buy funds recommended by the firm, which are generally cheaper, but across the board they buy cheaper funds.

Now at Space, we are a little less ‘charges’ obsessed though we pride ourselves on working with clients who are transparent about charges and want to offer value for money, whether they are direct to consumer or intermediary focused.

But we do quite like the ‘types’. It is certainly interesting that if an investor is a ‘chooser’ i.e. they are using a platform’s list, then they usually buying a cheaper fund. We wonder whether this suggests that trust in a platform therefore extends to trust in that platform to deliver value-for-money recommendations?

Of course, we develop our own models and group people depending on how they respond to user testing. We have tended to work on platforms that offer investment or retirement solutions or combinations of strategies rather than funds. Indeed, the FCA may find itself a little behind the curve, if it restricts itself to looking at how people choose funds.

But, whether they are picking funds or not, the FCA’s types certainly indicates the different psychologies involved between searchers, and choosers and reviewers – with the first group being brand new customers and the latter two groups having some relationship already.

Whether they are younger investors or people approaching retirement, searchers are obviously going to be the most sceptical about any offer. How much you should be concerned about turning searchers into choosers and reviewers may depend on where you see your sources of business coming from. But as we say food for thought.

It tells us a few useful pieces of information – first that charges may be on the minds of investors looking to buy but less so once that decision has been made and actually it is not a focus on many who visit this site.

Second, a list of recommendations from the firm – if it is trusted – is expected to be delivering value for money hence the behaviour of the choosers so it may be good to get trust in your brand established early. Once again, it is not rocket science but it doesn’t hurt to know.

It certainly may not hurt to bear these categories in mind when we look at retirement or digital wealth platforms. They may describe only part of a potential investor’s behaviour but it might be interesting to test against other types of investor/policyholder especially as they may seek help from searching the internet themselves.

Article by:

Marilyn Cole


6 September 2017

Congratulations on your latest job – data controller

5 January 2018

The 10 tech trends you need to watch in 2018