Designing Disclosures to Inform Consumer Financial Decisionmaking: Lessons Learned from Consumer Testing
Jeanne M. Hogarth, Board of Governors of the Federal Reserve System, Ellen A. Merry
Federal Reserve Bulletin
The Federal Reserve Board has studied ways to improve the information and materialsincluding required disclosures-that consumers draw on when they purchase and use financial products and services. As part of its regulatory development process, the Board has used qualitative and quantitative research methods in controlled environments to create new disclosures and to test them for their ability to enhance consumer understanding of a wide range of financial products and services. The goal has
... to develop disclosures that consumers can understand and use to help them make financial decisions that align with their personal circumstances. Key Findings This article provides an overview of results from some of the Board's consumer testing projects. The results reveal some lessons learned, suggest potential best practices for consumer disclosure content and presentation, and highlight challenges involved in crafting effective disclosures for financial products. The following are key findings from the testing: ‰ Disclosure language should be plain but meaningful. When reading disclosure documents, consumers are best served by terms that are straightforward. Small wording changes can significantly improve consumer understanding, but for some content, communicating the intended meaning may be difficult even with the use of plain language. ‰ Thoughtful design can make disclosures more usable. Carefully designed visual elements in disclosures, such as titles, headings, tables, charts, and typography can increase consumers' willingness to read disclosures and can aid their ability to navigate and understand them. ‰ Contextual information can improve comprehension and usability. Context, or a "frame," for information on a disclosure can help readers understand both specific content in the disclosure as well as its overall message. It can also help consumers better comprehend how to use the information. ‰ Achieving a neutral tone can be challenging. Although disclosures often strive for a neutral tone to avoid "steering" consumers in one direction over another, achieving neutrality is difficult.