Now you see it: drawing attention to charges in the asset management industry – April 2018

Practice area: Behavioural and experimental economics | Behavioural Economics | Business and industry | Competition & Antitrust | Consumer and firm behaviour | International institutions | NGOs and consumer advocacy | Regulators and government
Client: Financial Conduct Authority
Published: April, 2018

A behavioural experiment conducted by London Economics formed the basis of the FCA’s Occasional Paper ‘Now you see it: drawing attention to charges in the asset management industry’. Our experiment tested the impact of different ways of presenting information on charges on the extent that retail investors pay attention to charges in their decision-making. The treatments had significant impacts on respondents’ choices and their understanding and awareness of the charges.


The UK’s asset management industry is the second largest in the world and manages around £8.1 trillion of assets, which includes over £1 trillion in retail investment products. The FCA’s Asset Management Market Study found that some charges might not always be visible to retail investors and, even when they were, investors might not pay sufficient attention to charges or understand their impact on investment returns.

We therefore carried out an experiment on a simulated online platform with over one thousand non-advised investors to test the impact of four ways of presenting charges.

We found that all of the measures we tested increased the proportion of investors choosing a cheaper fund and some of the effects were sizable. In addition, 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 information which was most impactful was also prominently positioned on pages which all investors had to view.

These results highlight that simply providing consumers with information does not guarantee that they will use it in their decision-making. However, clearly presenting understandable and engaging information in a prominent way can increase the effectiveness of disclosures.