Designing the Goldilocks warning: not too scary, not too soft, but scary enough.

In Part 1 we suggested that risk warnings fail to protect customers. They are not properly seen, understood, or acted upon. They don’t overcome our common cognitive biases towards optimism and the illusion of control.

We are at risk from the risk warnings we all ignore.

In Part 2 we want to give you a customer-centred way of thinking about your risk warnings. What parts of a risk warning do people take on board? We’ve broken it down into seven elements:

  • Visual alert – getting your attention
  • Emotional appeal – holding your attention
  • Signed by the customer – a personal commitment
  • Personal experience – so it is about you
  • Relevant – to what you are thinking about
  • Simple – because no one wants complex

If you like an acronym, think: VESPERS

The first three – the VES – addresses the need to be seen, understood and acted upon. The second four – PERS – address the cognitive biases that make us brush aside warnings.

Visual: Be safe, be seen
We need Hi-Viz impact in warning messages. Text is the visual equivalent of wearing a black hoodie on a moonless night. Icons, call-outs, photos, and infographics are all visual techniques for drawing attention to a warning.

Emotional: Caring about money
Emotions get a bad press. “You’re being emotional.” is a criticism. There is a sense that money matters should be a thoughtful, analytical process – emotionless. But that kind of analytical slow thinking is hard. Most people aren’t going to do it unless it looks worth it, and that’s an emotional decision.

You have to care to invest time thinking hard about something. Caring is emotional. So your warning message has to foster a caring response in a way that “Can go down as well as up” fails to do.

Signed: Taking responsibility
I’m secretly quite proud of my signature. My looping R and slashing T feel like they should mean something. Graphology may have zero validity [1], but it psychologically matters to me when I have made my mark on something. It is a promise – to you and to myself.

The internet doesn’t replicate the signature experience well. Clicking a checkbox and saying “I am not a robot” hardly compares.

The EU regulation on signatures (eIDAS) is focused on the data and the proof of identity, not the emotional impact of taking responsibility for something [2].

Giving someone the opportunity to make a proper mark is key to making them feel that they are taking responsibility not just clicking on something they haven’t even read.

These three factors: VES – Visual, emotional and signed, account for the basics of getting a warning message across. Making it a cut through the commonplace biases we all have requires the PERS part of the formula.

Personal experience: Me me me!
The ‘Can go down as well as up’ risk message applies to everyone. But let me tell you a small secret. I’m special. I’m better than average. I matter more.

It’s only small everyday narcissism, there is nothing megalomaniac about it [3], but it is a feeling, thought process, an optimism bias, that makes us all predisposed to ignore warnings addressed to everyone.

Even if you just say, ‘Robert, the value of your XYZ investment can go down as well as up’ it is personalised, and therefore more interesting.

Relevant: My stuff
A message will garner more attention if it is both personal and relevant. In Part 1 we talked about the need to match warnings of risk with exposure. Relevance contextualises the risk to me and my circumstances.

This can mean, of course, that you’ll need to ask some questions about the circumstances in order to understand the exposure. This takes extra effort, but does create a more meaningful risk message.

Simple: KISS
Simple is always good. Warning messages often become complex quickly. The language is complex. Writing in an abstract, depersonalised way is also complex – ordinary people have to map what the abstract message means for them.

Your warning messages needn’t be complex. What techniques do your professional advisers use to explain complex products in fundamental ways that are simple enough for people to grasp?

Making VESPERS Work for You
So what might a ‘PERS’ part of a VESPERS risk message look like for your organisation? Well, that depends on your market, your regulations, your brand, your product, the scale of the risk, and other factors individual to you. But here is a flavour of a simple version:

Caution
Robert, the value of your £75,000 investment in the XYZ fund can go down as well as up.
This fund has a 4 medium risk rating on a scale of 1 to 7. It is designed to produce steady growth for people who can tolerate some losses over a 10-year investment. The plan is for the fund to grow overall during those 10 years. Such growth cannot be guaranteed.
Sign here to agree to invest: _ Robert van Tol_

Note that there is no great magic here. It is a personalised experience. It is relevant to the product. It has to be signed. It uses simple Plain English to outline the intent of the relevant fund. The caution header is a small emotional prod. Add a visual sign and you have all the elements necessary for a basic VESPERS warning message.

If we give more thought to how people experience warning messages, how we all make decisions using our emotions and natural biases, then we can make simple relevant warning messages that are seen, understood and acted upon. Warning messages that actually warn.

If you looking to ethically protect your customers and help them make good choices in your regulated environment, we would love to hear from you.

 

  1. British Psychological Society (2016), The Validity of Graphology in Personal Assessment
    https://ptc.bps.org.uk/sites/ptc.bps.org.uk/files/Documents/Guidelines%20and%20Information/Validity%20of%20Graphology_WEB.pdf
  2. Law Society (2016), Execution of a document using an electronic signature
    http://www.lawsociety.org.uk/support-services/advice/practice-notes/execution-of-a-document-using-an-electronic-signature/
  3. Afterpsychotherapy.com (2011), On Everyday Narcissism
    http://www.afterpsychotherapy.com/everyday-narcissism/