The algorithm of you: Tisa wants personalisation outside financial advice

Pardon the Interruption

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The use of personal data in providing product information is currently seen as straying into advice territory. The Investing and Saving Alliance says that this needs to change as Amazon, Netflix and co. have got consumers used to personalised services, with 61% of savers saying they would be interested in personalisation. 
New research by Tisa and EY Seren has found that consumers, even where they have surplus investible assets, are too confused by the options on offer to take decisions on investments, yet only 4m out of 52m UK adults have accessed financial advice in the past 12 months.  
Nearly a third (32%) of people find investment decisions too complex and confusing, Tisa says; 28% feel they do not know enough about the options available, a quarter (24%) does not know where to start and 22% say they feel overwhelmed by the number of product options available. 
Tisa argues that personalised support, even without a recommendation, could overcome this inertia induced by choice overload and complexity, saying use of personal data – such as Amazon and many other online services use – would give savers greater confidence in selecting products, greater reliability to make financial decisions and more motivation to select a product.  

Do consumers expect personalised service?

The advice boundary limits the personalisation of information, but Tisa finds that with consumers accustomed to personalisation in everyday tech and media services, they are now demanding similar products from financial services providers, and it wants to effect a shift in the boundary between advice and guidance, arguing that personalisation is now so embedded in everyday consumer experience that to offer financial products without it means consumers are reluctant to make decisions on them. 
Nearly two-thirds of people surveyed expressed interest in personalisation services to make savings and investment decisions, it says, and 73% would be interested in having “access to a savings tool which makes it easy to input data and select relevant savings products”. According to the research, younger savers significantly are more likely to want personalised support. 

Source: Tisa and EY Seren
“It is not surprising to learn from this research that consumers want their financial services providers to make greater use of personalisation and better use of their data to help them make savings and investment decisions. Choosing a tax wrapper and an investment product is arguably much more complex than choosing a movie to watch, yet financial services providers are the ones being curtailed in their ability to narrow down options for consumers and guide them to make a sensible investment choice,” said Prakash Chandramohan, strategic policy director at Tisa. 
He said too many consumers are being left behind by sub-optimal financial decision making, and those with smaller savings pots are reluctant to pay the fees for quality, regulated financial advice.  
“We are therefore seeking amendments to current regulation to allow personalised guidance and support to become more widely available and to level the playing field between investment firms versus other consumer industries,” Chandramohan added. 

Increasing engagement without the cost of advice 

Katharine Photiou, commercial director workplace savings at Legal & General, said: “Consumers are rightly demanding that the service they receive from their pension, investment and savings providers is modern, flexible and appropriate to their position. Retailers, streaming services and media have succeeded in adopting wide-spread personalisation in their products. There is no reason we cannot apply that approach to financial services.” 
She said for the vast majority of consumers, a personalised guidance and support service would increase engagement, improve their outcomes at retirement and drive a change in attitudes towards pensions and savings.  
“Nothing will replace full financial advice, but it is expensive for millions of smaller savers, who deserve quality support.  We are supportive of amending regulations to allow personalised guidance to be delivered without categorising it as advice,” Photiou added, calling for “a revolution in personalised financial services. 
Legal & General has experience with how personalisation drives interest. “We went with a personalised support model for our workplace pension interactive video statements, which improved engagement dramatically.”  
What would be the risks of allowing greater personalisation in financial guidance?

Charles Goodman
Billy Burrows