Recent eye-tracking research highlights how minor changes in the visual design of investment platforms can significantly influence investor decisions, potentially saving UK investors millions. By making fund fees more visually prominent through larger fonts or strategic placement, participants shifted 11.2% more of their investments to lower-cost funds, increasing to 16.9% in optimal scenarios. For a £10,000 investment, this means an additional £1,120 to £1,690 directed towards cheaper funds, enhancing potential long-term returns.
Fees are a controllable factor in investing, as highlighted by Warren Buffett: they persist as a constant drag on returns. Despite regulatory efforts for transparency, UK investors often neglect cost considerations, focusing instead on past performance. This behavior persists despite evidence that lower fees are among the most reliable indicators of superior long-term returns. The issue is not disclosure but the competition for attention between fee information and performance charts on investment platforms.
Eye-tracking studies reveal that visual saliency—how information captures attention—plays a crucial role. Researchers found that by adjusting font size and placement, attention to fees increased, leading to better investment choices. The results show that making fees more noticeable reduced the time taken to notice performance graphs by up to 75%, significantly shifting focus towards fees.
The research underscores the cumulative impact of fees. A 1% annual fee difference on a £100,000 investment can result in a £186,877 variance in retirement savings over 30 years. Fees remain a reliable predictor of future fund performance, contrasting with the uncertain nature of performance forecasts. Thus, reducing high fees offers a mathematically certain way to improve net returns.
Industry resistance to transparency persists, with marketing often emphasizing past performance over fee impact. Investment platforms could enhance client outcomes by redesigning fee displays, aligning with regulatory focus on “choice architecture.” Eye-tracking technology enables large-scale studies, advancing behavioral finance research by demonstrating that minor visual adjustments can significantly alter investment behavior.
The findings suggest that improved investment outcomes may be achieved through straightforward interface design changes, without complex educational interventions. Recognizing the limits of human attention, platforms should act soon to emphasize fees as prominently as performance charts, leveraging natural investor focus. The question is not if platforms should make changes, but how quickly they will implement these evidence-based solutions.
