Research Note: Choosing wisely: preferences, comprehension and the effect of risk warnings on financial promotions for investment products

Our research from online laboratory experiments provides evidence-based understanding of how investors choose high risk investment products.

Read the Research Note (PDF)


In the current low or even zero interest environment, there is evidence that retail investors, attracted by very high advertised rates of return, may be investing in products such as mini-bonds without fully assessing the associated investment risk. To explore this concern, using online experiments, we tested investor behaviour and comprehension of risk in the context of financial promotions for high risk investments.

Our results show:

  • A new risk warning temporarily mandated by the FCA improves investors’ comprehension of product risk.
  • In general, investors prefer lower risk investments (eg Cash ISA) but are more likely to choose a speculative mini-bond than a Stocks and Share ISA. While this could be a legitimate product preference, it may suggest that investors misunderstand relative product risk.

Our results support regulatory policy by providing evidence-based understanding of how investors choose high risk investment products.


Maura Feddersen, Cameron Gilchrist, Lucy Hayes, Timothy L. Mullett, Helena Robertson, Laura Smart, Neil Stewart, Jonathan Titley.


Research notes contribute to our work by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence we may use to discharge our functions and inform our views. We strive to ensure research outputs are accurate, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that research notes contain any errors or omissions, they should be attributed to the individual authors, rather than the FCA.