Cambridge Enterprise: Case Study
As more and more pension schemes are closed or scaled back, individuals are being asked to take an increasingly active role in their financial planning for retirement.The public at large has a relatively low level of financial literacy, and there is a constantly widening gulf between this and the knowledge required to accurately assess the complicated credit, insurance and investment products which are available in ever-increasing numbers.
The problem faced by providers of online financial planning tools is not poorly made decisions on the part of their customers, but decisions that are not made at all.Most employees are not helped by their access to pension sites: they either fail to use the sites at all, or make poor decisions when they do use them. Various biases, so-called ‘maths trauma’, a widespread lack of financial literacy and labyrinthine financial websites can all lead to either poor financial decisions or decision avoidance on the part of the consumer.
The American financial services firm BlackRock requested an assessment of Target Plan, its online financial planning tool, from international consulting firmTowers Perrin (nowTowersWatson) who in turn sought the advice of a group of leading Cambridge academics.
Consultancy Services contracted with Towers Perrin for the services of Dr John Coates of Judge Business School, Dr Michael Aitken of the Department of Experimental Psychology, and Professor David Spiegelhalter of the Department of Pure Mathematics and Mathematical Statistics, to consider and report on the various reasons which discourage the public from using online financial planning tools, and suggest improvements to BlackRock’s Target Plan website.
Following the completion of the initial project,TowersWatson contracted with Consultancy Services for the services of Dr Coates and his colleagues to assist in the design and review process of an employee portal for BlackRock itself, to encourage its own employees to view important information more frequently.
It is hoped that the project will help to design better communications and tools to engage employees and customers, and enable them to make better-informed investment decisions.
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