The Financial Conduct Authority has encouraged firms to pre-test their communications to clients to ensure they drive pension engagement.
Research from found engagement with emails was low and urged firms to consider pre-testing communications before they are sent out.
A paper, ‘Is timing of the essence? Testing when to engage UK pension customers’, detailed how the regulator used insights from behavioural science to design emails and subject lines that addressed common psychological barriers to engaging with pensions.
Barriers include information overload and present bias – the tendency to settle for a smaller present reward rather than wait for a future larger award.
It carried out three experiments to examine whether behavioural messaging could reduce these barriers and then tested one of these behaviourally informed email and subject line combinations with customers of two pension providers in a field trial.
The first experiment used an artificial inbox set up and found that subject lines which highlighted ‘the future you’ and just a ‘few more steps’ could drive higher initial engagement, as measured by open rates.
These were designed to mitigate the impact of present bias and information overload as behavioural barriers, according to the FCA.
Experiment’s two and three tested how the regulator’s draft emails affected comprehension of the information in the emails and participants’ attitudes towards MoneyHelper.
The FCA said the second experiment showed the value of pre-testing emails, as the graphic and colourful behavioural emails it tested proved to be “off-putting” and potentially raised doubts about the trustworthiness of the emails.
This led the regulator to launch a third experiment to test its redesigned emails which still leveraged behavioural messaging but through a simpler email design.
During the field trial, the FCA tested six behaviourally informed touch points centred around life events and changes to customer’s financial situations.
Findings
The research found click rates on the emails it tested were low, at around one to seven per cent depending on treatment and age group.
In terms of the touch points, the FCA saw limited effectiveness in the ones it tested with mixed effects and variations across age groups, touch points and firms.
The FCA felt following up with consumers who were already somewhat engaged with their pensions could be useful to drive further engagement and encourage use of guidance services, in the regulator’s case this involved customers who had recently logged into their online pension account.
“Overall, our research shows that it is challenging to drive initial engagement with pensions through emails and that adjusting the timing of emails to notable times may have limited scope to substantively move the dial on engagement.
“Moreover, the backfire effects captured in our online experiments show the value of pre-testing communications against their desired impact,” the report said.
The FCA thought future research and testing by firms could explore touch points across wider financial customer journeys.
As well as alternative approaches beyond engagement with pensions guidance for driving improved retirement outcomes and further consumer group segmentation.
alina.khan@ft.com
