framing
‘How a choice is presented affects the decision consumers will make’
One of the obvious examples in the retirement market is the positioning of annuities, so take care presenting the benefits of annuities to your clients.
FCA research revealed that when presented as a form of insurance, 66% of consumers preferred an annuity to a savings account. When presented as an investment product only 17% chose the annuity (‘Does the framing of retirement income options matter?’, 2014, FCA).
action
There are a number of actions you can take:
- Present annuities as an insurance product – ‘however long you live you’ll be guaranteed an income every year’.
- Watch the ‘a’ word. It has been discredited (we call it a ‘guaranteed income for life’).
- Emphasise the death benefit options (if leaving a legacy is an issue). Remember clients can now buy a ‘money back guarantee’ (100% value protection).