Mind-shifts for policy-makers, lawyers, and other organizations communicating disclosures, terms, and conditions
Observing some of the key dynamics and preferences of how lay people interact with disclosures, it is clear that those composing disclosure communications need to embrace new mindsets. These mind-shifts can open new opportunities for how the communications can be structured, and can increase awareness of what will connect with the target audience.
Thinking of disclosures as modules, not as entireties. Policies, fine prints, and contracts may exist as singular things, but their contents are modules that can be extracted and presented more selectively and discretely. Users would prefer not to have a singular disclosure — a long document, a separate page, a footnotes section. They would rather have modules of the disclosure be presented to them in a more relevant and direct way.
Considering the disclosure as a communication experience, not a text document. Reducing a disclosure to sentences, paragraphs, and documents of text is just one option in how to communicate the disclosure contents to a person. The text being published is not a successful disclosure. It only exists (successfully) when a person reads it, understands it, and knows how to apply it to their own situation.
It is a multi-step communication experience. Regulators and companies should understand that a user does not simply make a decision, and need a disclosure at this decision moment. Rather, the user goes on a journey of many actions in order to make an investment decision. The most common path we saw was as follows: exposure to the idea, orientation to the core concepts and offerings, research into possible options, choice of one option, purchase of that option, and maintenance/revision of that investment.
Disclosures need not happen just at the one step of the purchase of an investment option. In fact, according to most of our testers, they might be more valuable in the run-up to this purchase decision (when the user is weighing options against each other, before she has begun to focus in on a single product) or in the honeymoon period after purchase (when the user questions ‘what did I just buy?’ and ‘am I sure this is a good fit for me?’).
Seeing the disclosure as an experience that can happen at many different moments helps expand the concepts about what ways to make effective communications. It requires going beyond one-time presentation of text ‘magic words’, and having other techniques and materials for communicating the content at a series of touchpoints.
The visual presentation of a disclosure is an important signal to the audience. How a disclosure looks has a strong effect on whether and how people engage with it. Visual design choices — including the size of font, the type of font, the amount of white space, the placement on a page or other interface, use of text, images and other media — signal to audience if the content is “for them” or not. If the visual design is not oriented around and tested with the intended audience, then there is a strong likelihood that it will be a crucial factor in potential users’ non-engagement with the disclosure. The traditional visual designs of disclosures, with dense, serif-font, and small-point text, tends to signal that it is not something meant for the average reader. Our testers indicated that this visual presentation makes it seem like something meant only for lawyers, regulators, or a consumer that was more invested than they were. They did not consider themselves to be in the target audience based on the visual design, and thus chose not to engage with the disclosure.
Human touch. It should feel like a real person is conveying this information, and that it is related to human situations. This means taking it out of abstract phrases and jargon, and making it more conversational, and human-to-human. It could involve using the word ‘you’ more into the text. It can also involve much more active language, and less passive language.
Readable and relatable information. The company should engage the user with straightforward messages and very clear, distinct headlines that announce the value of the content. It should be at a maximum 8th grade language level.
Scenario and persona-based. Help a person understand what the effects of the disclosures are by humanizing it to actual or possible life situations. This can be by explicitly explaining different scenario outcomes that result from these disclosures. Or it could be relating these disclosures to fictional characters (personas) that can tell stories about how the disclosures or the terms underlying them affect them.
Core visual design rules. Disclosures should adhere to basic good rules of visual design. This includes eliminating distracting information. Use generous white space, giving space between different categories of information. Use fonts that are large (12-point font minimum), and distinguish among different parts of the text using different font-sizes, bold and italics, and color.
Balance between data-rich visuals and text. Though generally more visuals can be a good approach to more effective communications, when visuals are rich with data (like charts, graphs, and other visuals that are conveying a complex set of data), this principle does not hold true. Many of our users were overwhelmed by the graphs and charts that meant to explain to them something about the financial product they were considering. These users would have preferred text descriptions, which would be more legible to them, than complex, data-rich graphs, which they did not feel equipped to interpret correctly. Rookie investors need either more simplified visuals, clear text annotations, or avoidance of these complex visuals. Otherwise the charts and graphs reduce their engagement with the communication, making them feel lost and and not the intended audience.
Prominence and immediacy. Do not bury the disclosures. Do not put them in footnotes (that the user must click or scroll to encounter). Do not put them in separate policy documents (that the user must click or navigate to encounter). Put them — at least the core of their messages and the information that is the most crucial for the user to understand — in places of hierarchy on the interface. They should be given front and center placement, so that it is clear to users that the disclosures deserve their attention and that it is easy to give this attention.
Some of the disclosed content that is of particular concern (i.e., fees) should be given special hierarchy. Using icons, large fonts, strong colors, prioritized placement on the communication, and/or distinct backgrounds (like a pop-up), this information should be flagged as of particular importance — that a user should read it, if nothing else. There could be a special block at the top of any communication that has the most user-valued disclosures, summarized.
Strong guidance. The company should take a guiding role in terms of leading users to the key information in the disclosures, and modeling how to interact with it. The expectation should not be that people will simply find the disclosed information on a website, app, or print communication because it is present there. Rather, the company should take the position that they are ‘guiding the person through’ the disclosures actively, using markers and signals, and also required interactions.
Interactive based upon the user’s needs and preferences. The information should respond to the inputs, details, and preferences of the person that is looking at it. Rather than give a standard, full disclosure to a person, allow the person’s response (and also, perhaps, the data you know about this person from their digital trail) to customize what to show them.
Easy Comparisons. Allow the user to understand what this disclosure means in context — particularly by allowing them to understand how it compares to other similar offerings. Ideally, the user will be able to easily compare many different products/services/policies’ same terms and disclosures.
Our design work also uncovered several sources of inspiration that regulators and companies can draw from, in order to create more effective disclosures. These analogies came from user recommendations about what kinds of disclosures they find useful and engaging, and our own research into effective disclosure models. The most influential analogies we uncovered were as follows.
- Credit card explanatory statements, as distributed by companies in outreach mailers and also after having signed up for a card, giving clearly designed and categorized information in one or two pages about the terms of the card.
- Nutrition labels, that give standardized categories of what kinds of information the consumer should pay attention to, in identical formats, to allow for easy cross-comparison and guidance to the user about what factors to focus upon.
- The USPTO’s trademark icons, that give standard, visual representations to use across different communications and platforms — hopefully making difficult concepts more familiar and approachable using pictograms.
- The SEC’s structured data standard for disclosures, that allows it and other third parties to aggregate disclosure information, compare it against each other, search it more easily, and build user-facing tools on top of it.
Models we propose FINRA, financial companies, and interested third-parties pursue for user-friendly disclosures
As discussed in this report’s initial discussion, we recommend that those interested in making stronger, more engaging disclosures consider investing in more ambitious new designs, as we have categorized in four tiers. These tiers define categorized strategies to use to improve disclosure, from incremental to ambitious. As a supplement to those tiers, here we dive into greater detail about some of these proposed strategies, including those more specifically tailored to FINRA and its aim of improving lay people’s ability to understand the financial products they are purchasing and finding the right match for their risk preferences and other situational factors.
One of the least-intensive new models is to improve the visual design of the disclosure text, but improving its composition layout, the use of illustrations and visuals, the choice of font and size, and other visual choices that can signal to the audience that the disclosure matters and that can make it easy for them to understand. The key points of the facelift are giving more categorization and navigation through the use of prominent headers, white space between categories, and graphic illustrations to mark the differences among them. The description of Tier 1 types of interventions in the Introduction provide explicit strategies for visual improvement of disclosures.
Visual Representations of the Terms of the Disclosures. Whether through simple icons, pictograms, or other illustrations, users respond positively to visuals accompanying disclosures. The graphics draw their attention, and then give them an initial shortcut to understand what the text contains. The visual representation can instigate greater engagement and comprehension of the disclosure, even if the visuals are relatively simple (like the stripped-down black ‘investicons’ proposed in our final concept proposals).
Tiering Information. The amount of content communicated in one interface to the user should be very limited. One rule would be to have a single message, with a small set of statements that explain it. Another term for this rule is ‘snackable’ design. Rather than give a user full plate or even a buffet of information — with huge portions and many types all at once — the goal is to give the user small chunks, one at a time. Users should be able to snack on content, consuming one message on the interface, before moving to another.
Customization of the disclosure to the person. Could we use the data that we know about this user and their peers, to show them customized communications that apply specifically to them? This could be based on their specific age, wealth, credit rating, goals, and other personal factors, or it could be based on averages for people in their demographic.
Lightweight, meaningful friction. Can we make the disclosures more engaging by using some requirements and force? In order to move past the disclosures, the user would have to sign off with initials, or to answer some quiz questions. These friction points would have multiple purposes. One is to forcibly slow people down on their process, to make them tune in to the disclosure at least for the moment it takes to complete the required task in order to move on. The second is to show that this disclosure moment is meaningful enough — and possibly risky enough — to require a deliberate step of its own. This may flag it as a priority to a user, letting them know that they should be paying it more attention.
Standardizing the presentation and data format of the disclosure information. One theme across all the ideas and user research is that users would benefit from more standardized presentations of disclosures. Whether this be done through standard visual formats (like a nutrition label), iconography and headings (like the investicons), or otherwise, a standardized way to present disclosures will help people recognize, navigate, and use the disclosure communication.
In addition to standardizing the visual presentation, the disclosures can also be standardized in terms of the data format in which they are disclosed to regulators (and the public). Rather than being offered in natural language on the company’s chosen communication, the information about the different investment products can also be collected into a single disclosure, saved in a machine-readable format that is standard to all financial companies’ disclosures. This machine-readable version of all the products’ disclosures can be submitted to the regulator for its review, as well as made available to the public, for third-party developers to use in building tools that help customers analyze and choose among investment options.
Smart Disclosure. In this type of initiative, the regulators would require, or incentivize, the companies to disclose their key terms and practices in machine-readable formats, encoded in standard ways with all the terms put in standard ways. These machine-readable disclosures can then be drawn upon by governmental and third-party developers, who want to make user-facing applications that empower people with the ability to sort and compare offerings, and intelligent tools that can sift through the fine print for them.
Tools companies could use regularly as alternatives to the status quo of footnote-and-small print disclosure formats
Disclosures Embedded in Choice-Centric Dashboards. Where are the target users currently looking? Often, they look at the settings dashboards, in which they are able to turn preferences on and off for their device or application. What if we embed the choices in the disclosures and the information contained in them into a central place, and encourage the user to ‘take control’? Rather than give static terms that seem immutable (and thus more likely to be ignored as something out of the user’s control, and an unfortunate given), give the user active choices to make. For example, have the user set what kind of fees they would tolerate, and then provide them with a curated set of options to choose from — or principles to abide by — to move them closer to a decision around what financial investment to make.
Comparison Matrices. The various options and factors would be laid out in a matrix table — with the options on the x-axis as row titles, and the key factors on the y-axis as column titles. The matrix would then show the user how the various options compare on the factors. The individual boxes can be colored to show positive vs. negative, to make the comparison more glance-able.
Interactive, Step-by-Step Explainers of Key Terms. This design stages the modules of the disclosure, so that it is not presented in whole but rather step-by-step. It provides more focus on individual terms, so that users are more likely to pay attention to each key point’s main message, if not also their details. It also forces the user to slow down and focus on the disclosure, rather than ignoring it altogether or glancing over it.
Story-based disclosures and Role Modeling. Story-based disclosures present the user with narratives that describe people like them, or people that they could aspire to be. These narratives dive into how these other people use and react to the disclosures. The value of the narrative is giving possible role models for the user, modeling what kind of things to pay attention too, and decisions to make, and how to best make these decisions.
Narratives humanize the disclosures, and give clear ways to identify with them. Users can benefit by being able to see, and even potentially adopt, the decisions that role models in these narratives make. That way the user doesn’t have to do too much complex and heavy thinking, but rather can choose which role model best fits them and then follow through on the role models decisions in their own situation.
Conversational versions of the disclosure. In this redesign of a standard text disclosure, the terms are not listed out one-by-one. Instead, they are revealed through a question-and-answer format, in response to a particular question or use case. In the low-tech version of a conversational disclosure, a FAQ (frequently-asked-question) presents common questions that a typical user would have about the contents of the communication, and then responds to each question with explanations. The text is thus not a monologue from the company or the regulator, but rather is more a back-and-forth conversation. This model can increase engagement, by making it more clear what question the disclosure text is answering, and also dividing up the content into more meaningful bite-size sections.
In addition to specific disclosure concepts, our class also arrived at a number of insights about FINRA’s relationship to its lay public and to the companies it regulates.
Building Stronger Regulator Brands. Consumers are interested in reliable, neutral third-parties giving them clear information about a decision they’re contemplating. Regulators like FINRA are poised to play this role, as experts in the domain who are also interested in consumer protection as a fundamental mission.
Presence on existing online social networks and fora. Rather than building new question-and-answer sites, a regulator or other body can engage users on sites that they already frequent when exploring financial investments and other decisions. Sites like Quora and Reddit have high usage by professional millennials, where they are asking for peers’ and experts’ input on issues they are experiencing. A regulator like FINRA could consider devoting regular time to respond to users’ queries on these sites about financial investment and decision-making, thereby establishing FINRA’s brand and also distributing quality, consumer-empowering information to users where they are specifically requesting it, and so are more likely to be receptive to it.
One of the central tensions running through this disclosure redesign work is whether the role of the regulator (in this case, FINRA) should impose stronger requirements for good design on the financial companies making the disclosure, or be involved in designing cross-company disclosure models that the companies would then be responsible mainly for populating with content.
Not all financial actors are ill-intentioned to consumers, but the regulation must still prevent those that are from abusing consumers’ trust. We are wary of proposing disclosure-related regulation just to stop ill-intentioned actors, especially if it restricts the creativity that better-intentioned, well-resourced actors can use to create more effective disclosures. That means any policy must have the dual purpose: bringing up the bottom while not capping the innovative types of disclosures the actors at the top might want to explore.
That said, we do encourage regulators like FINRA to take a stronger role in proposing standardization among all disclosures, so that there is a consistent, familiar way for users to understand crucial terms about financial products before they make investments. Standardization of data standards, in how the companies report the disclosure content to FINRA or to another third-party, will also allow for the creation of the interactive smart tools, that allow users to compare and discover trends and preferences. Our target millennial audience demonstrated a strong interest in the creation of these smart, interactive, online tools, and the regulator could facilitate others’ creation of them through standardization of structured data reporting.
Even if FINRA and other regulators do not decide to create standard disclosures, ideally they will publish ‘model disclosures’ that embrace the principles and strategies laid out here, particularly around clearer visual composition and greater interactivity. These official examples could induce companies to invest more in their disclosure design, raising the bar for what ‘sufficient disclosure’ seems to be, and bringing this in line with what engages and informs lay people. They could also become defaults, so that even if they are not required explicitly, they could lead to greater standardization of disclosure communications, with companies following the models in order to comply with the regulators and also to avoid having to invest in their own design process.
As more government agencies and companies realize that the status quo models of disclosure do not achieve their intended effects of informing and empowering consumers, there is a need for regulators to model more visually coherent, interactive, and standardized means of disclosing crucial terms and conditions to companies. We urge them to use Tier 1 strategies of plain language and visual design as a ‘floor’ that all companies must abide by, but we also urge them to initiate conversations, develop example models, and require standardized, structured data disclosures that would allow for more ambitious tiers of new disclosure designs to flourish. If disclosures are truly going to engage users’ attention and equip them with knowledge to make smarter decisions, then regulators and companies need to think beyond the standard paragraphs of legalistic text, and experiment with richer, more interactive experiences that communicate the disclosure content in ways that do not feel like “fine print” or “footnotes”.
 Several federal government agencies have collaborated to create more standard consumer-facing notices around credit cards. Some of the reports on the findings of these print-based and online disclosure redesigns can be found at the Federal Reserve’s site, which presents a compendium of agencies’ reports on better notices: http://www.federalreserve.gov/pubs/bulletin/2011/articles/designingdisclosures/default.htm
 The FDA established the “Nutrition Facts” label that is now ubiquitous, though it has recently revised its designs to have some information, like calories and serving size in more prioritized fonts and bolder type. http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/LabelingNutrition/ucm385663.htm
 The USPTO held an ‘iconathon’ to create standard intellectual property symbols, that could be accessed widely via the popular icon resource the Noun Project. The symbols that were selected from the hackathon are available at https://thenounproject.com/USPTO/.
 The SEC has an Office of Structured Disclosure that aims to make the data that is submitted to the SEC and that is published by it more accessible and easy to use. This means that the data is tagged and saved in standardized ways, that allow for machines to read it and analyses to be run of it, across actors and categories. More information is available at https://www.sec.gov/structureddata