Guidance that is tailored to an individual’s circumstances and presents clear, relevant options “significantly” improves consumers’ financial decision making, the Association of British Insurers (ABI) has stated.

Research from the ABI and Thinks Insight and Strategy’s behavioural team assessed the impact of ‘personalised’ guidance on individuals’ financial decisions.

It noted that people were struggling to make crucial decisions about their savings, investments and pensions without regulated financial advice, and current rules were restricting firms from providing tailored guidance.

The research found that 76 per cent of participants made a decision leading to a better financial outcome when they received personalised guidance.

In comparison, 14 per cent of participants were able to make a decision that would leave them better off when they received ‘generic’ guidance.

Furthermore, the ABI and Thinks Insight and Strategy revealed that customers were more likely to be willing to pay for personalised guidance than generic guidance, with 40 per cent willing to pay for generic guidance compared to 46 per cent for tailored guidance.

Receiving personalised guidance also reduced the participants’ need to seek out additional information, down from 56 per cent to 45 per cent.

The ABI and Thinks Insight and Strategy noted that the research results strengthened the case for financial service providers being able to offer personalised guidance, and added weight to the government and Financial Conduct Authority’s (FCA) proposal for a targeted support regime.

“Navigating the financial world can be confusing and it’s vital we do more to help people save, invest and make informed decisions when accessing their pensions,” commented ABI director of long-term savings, Yvonne Braun.

“Our research clearly shows that customers can benefit from guidance tailored to their personal circumstances where it presents clear and relevant options to help decision making.

“This type of guidance should be enabled via the government and FCA’s recent proposal for a targeted support regime, and we look forward to working further with government and regulators to bring this regime to life.”

LCP partner and former Pensions Minister, Steve Webb, added: “This is vitally important research, measuring and demonstrating the potential benefit to consumers of being offered personalised guidance.

“We already have a world in which savers have complex choices to make at retirement, and the government is also consulting on giving them additional choices about how and where they build up their pension pot. But extra choice can cause confusion and lead to poor outcomes if savers are not helped to navigate these choices.

“Regulations should make it clear that providers can use information which they hold about savers to offer guidance which is personalised and presented in a way that helps people to make good choices.”

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