by Dr Louis Williams, Head of Psychology and Behavioural Science

How do your clients interpret past performance? Is the information you provide valuable, or could it be leading them to make poor decisions?

Under the consumer understanding outcome of Consumer Duty, the FCA wants firms to support customers to make informed decisions by giving them the information they need, at the right time, in a way they can understand it. To support alignment with this outcome, we at Dynamic Planner wanted to find out how clients interpret the performance charts they are shown by their advisers.

Despite the requirement to include disclaimers to the contrary, research shows that past performance data is often relied on as a useful source of information for decision making1. This can lead to poor choices due to behavioural biases such as availability bias, where clients use information that comes to mind quickly, and recency bias, where clients assume that future events and trends will resemble recent experiences2.

Benchmarks are used in past performance charts to provide clients with a point of comparison, but little research has explored how these are used in making decisions, and whether they are or are not beneficial.

In collaboration with Mark Pittaccio (Quilter), Dr Eugene McSorley and Dr Rachel McCloy ( University of Reading), we conducted a research project to explore eye movements and decisions of experts and non-experts when interacting with past performance charts. A total of 60 participants took part in the study, and were categorised into three groups – students, clients, and experts – based on their background and experience.

Eye tracking technology monitors eye movements during decision-making processes, providing insight into how we process complex information before making a choice. Such techniques have been used across disciplines including sports, art, medicine and decision theory.

We used the technology to monitor the eye movements of participants while they viewed a range of charts depicting one year of hypothetical performance. Participants were fitted with an EyeLink II tracker headset, and answered questions for each graph about what they would do in the situation – would they stay invested? – and how they felt. They were also asked to estimate the maximum return and the return at the start of month nine to gauge their level of understanding.

We found that clients spent more time and made more fixations and visits to the last two months and the y-axis of performance charts than both experts and students – that is, they relied significantly more on recent performance to help with decisions.

They made even more visits to the last two months when they were provided with a benchmark, whether returns were positive or negative. The availability of a benchmark appears to be very important for clients, providing useful information on whether to remain invested and affecting their views on the future of their investments. However, paying too much attention to the benchmark and to recent performance can distort decisions.

A benchmark was helpful in reducing concerns when participants had achieved negative returns. However, if they had experienced positive returns, the inclusion of a benchmark reduced their propensity to remain invested. The presence of a benchmark also increased the complexity of the charts for non-experts, with both students and clients requiring more time to make a decision when a benchmark was shown.

Benchmarks and portfolio values are factual representations of what has actually happened, but they tend to be presented without context of the client’s own financial objectives or whether or not their financial plan is on track. This lack of context could lead to poor assumptions being made based on very recent performance.

The adviser’s skill is important to help make the information relevant to the client’s individual circumstances and help them resist the temptation to act on detrimental behavioural biases.

A personalised benchmark that demonstrates whether the client is ‘on track’ to achieve their objectives may be more appropriate than generic benchmarks. Further research can help us understand this and the effects of visual framing on clients’ interactions with past performance data.

Download the full report


  1. N. Capon, G. J. Fitzsimons, & R. Alan Prince (1996). An individual level analysis of the mutual fund investment decision. Journal of financial services research, 10(1), 59-82.
  2. S. Diacon & J. Hasseldine (2007). Framing effects and risk perception: The effect of prior performance presentation format on investment fund choice. Journal of Economic Psychology, 28(1), 31-52; W. Bailey, A. Kumar & D. Ng (2011). Behavioural biases of mutual fund investors. Journal of financial economics, 102(1), 1-27.