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Researcher to Explore How Online Disclosures Shape Investment Choices

Every day, millions of people seeking to build a nest egg for retirement, realize shorter term gains, or diversify their assets go to the web to research and select financial products.

But when it comes to making selections based on their understanding of fees, risks, and expense ratios, research shows consumers aren’t doing a good job because they don’t understand the disclosures provided to them.

Oded Nov, an associate professor of technology management and innovation at NYU Tandon School of Engineering, is leading a study in collaboration with Jeremy Burke, an economist at the RAND Corporation’s Center for Financial and Economic Decision Making that explores novel ways of using interactive technologies embedded in online disclosures to empower consumers’ investment decision making.

Nov said the objective of the study, funded by a new $101,000 grant from the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation, is to examine the effects of the interaction between design features and users’ personal characteristics in order to develop interactive disclosures that lead to more informed decision making.

“There is ample evidence that a lot of people just don’t do a good job when it comes to making informed, rational investment choices,” said Nov. “They don’t grasp the information presented to them by funds, and they don’t pay attention to important risk data. It is good policy and practice to develop a new generation of interactive, more effective types of disclosures.”