framing
‘How a choice is presented affects the decision consumers will make’
Framing can occur in many ways when defining investment strategies. Some examples to watch for are shown below.
action
These situations are unlikely to arise with advisers, but they can help you understand how framing can drive customer behaviours:
- Asked to choose between three funds with different equity allocations people are more likely to choose the middle option. So offering funds with 0%, 40%, 80% equity allocation or 40%, 70%, 100% can lead to different results.
- An online application form asks people to enter which investment funds they’d like to invest in from 100 funds. There are only four boxes shown on the form, but a simple click creates more boxes. Despite this, most people choose four funds. When the number of boxes is increased to six, most people choose six funds.