2. Background Research
The project began from the fundamental assumption that current models of notice — in the form of text paragraphs containing legal jargon — do not effectively engage most lay people, nor does this style of notice help them understand or act upon the information the communication means to convey. There has been substantial conversation in legal research about the failure of traditional forms of notice, as well as from behavioral economists. Government agencies, including the SEC, have also acknowledged that their traditional lengthy, text-based disclosures are not effective communications to most lay consumers. There is a particular challenge in making user-friendly, usable web-and app-based disclosures, since most of the current disclosure models have been crafted for print documents, as government agencies such as the FTC have recognized.
Our class’s design process began with a review of previous research and proposals about how legal and regulatory disclosures could be communicated more effectively. It built from disparate threads of academic research on designing more effective communication of complex information to lay people. In particular, it builds on work in legal academia (and practitioners) considering how to improve the visual design of contracts in corporate settings and from business-to-consumer. It also draws on research from social sciences about people’s decision-making when faced with complex information and choices, like in the domains of data privacy, healthcare, and insurance.
Simplifying text of disclosures is not necessarily effective
This study indicates that merely converting a disclosure communication with plain language and more structured layout (headings and bullet-points) is insufficient to change laypeople’s lack of engagement with disclosures, or their ability to comprehend it. It suggests that we need to think beyond merely using plain language and more headers and categorization to improve the effectiveness of disclosures. Mere ‘simplification’ of text does not improve the usability of a disclosure.
Factors to consider when designing better disclosures
In the realm of privacy design literature, Florian Schaub, Rebecca Balebako, Adam L. Durity, and Lorrie Faith Cranor lay out the key factors to manipulate when crafting new kinds of disclosures and notices. They define a systematic scheme of what type of factors a disclosure-designer should be conscious of as they choose how to present information to lay people. This scheme can be useful to regulators and to companies, in thinking about next generation disclosures.
The key parts of the scheme for disclosure design include (a) timing, (b) channel, (c) modality, and (d) control. Timing concerns when the notice is presented, recognizing that there are many different ways to time a notice — periodically, just-in-time, on demand, during an introduction to the experience, or persistently. Channel concerns where the notice is presented, for example, on the same platform on which the user is engaging with the product to which the notice refers (a primary channel), or on a different platform that might have more space and ability to detail the information (a secondary channel, like a booklet, or a separate website, or a desktop site when the user is initially on a mobile device such as a wearable). Modality concerns how the notice is presented, for example, visual notice, auditory notice, haptic (i.e., through vibration or ambient light or taste) notice, or machine-readable notice. Finally, the factor of control regards how the notice is presented to the user, for example, as an opt-in experience, an opt-out experience, something that blocks the user, or something that is completely optional.
In our design work, we took note of this scheme from the privacy disclosure domain, and used it to prompt new kinds of concept designs during our brainstorming and generation phase. The choices around notice design provide useful levers to those experimenting with more effective and radical types of disclosure design. Designers can be more aware of how they can go beyond standard text-based notices that are stored on a disclosure part of a website, or are shown to a user immediately before they purchase a product.
More visual communication of legal text improves comprehension
In the world of legal scholarship, particularly around contracts and transactions, there is a burgeoning track of work exploring how communications of legal terms and conditions can be made more user-friendly. In the space of contracts between businesses, Stefania Passera, a designer, and Helena Haapio, a corporate attorney, have been researching how the integration of more visuals into the contract documents can enhance the usability and user experience of these contracts for their end-users. With a priority on user-centeredness, meaning that artifacts should support the user in performing a given task and achieving their goals, Passera and Haapio worked directly with users of contracts to redraft them to be simpler, shorter, and more visual. This involved integrating histograms, process maps, and images into the contract to make sense of the obligations, conditions, and points of reference contained in the document.
After redrafting the document, Passera and Haapio then tested it with people from the corporation’s legal team, business team, and sales team. They found that the more visual contract produced less misunderstandings, and was faster to read and understand. The users also had improved user experience, perceiving that the contract would be easier to use and to navigate. It also improved the brand image of the company, in the eyes of the users. The conclusion of the study is that contracts that are more visual, and designed with the principle of user-centeredness, can better allow for knowledge transfer, prevent costly misunderstandings, and reduce frustrations among the users.
Proposals for new models of disclosures
Beyond the discussions that basic text simplification of disclosures does not seem to improve their usability, and that more visual and user-centered approaches can increase user comprehension, there have also been a crop of new models for disclosures forwarded by academics and practitioners. From our research, we present a shortlist of these new models that we thought might be useful in guiding our own design work around improved financial disclosures and decision-making.
A. Choice Engines
Behavioral economists have touted the rise of the choice engine as a new way to disclose important terms and conditions to consumers, and also facilitate their decision-making around them. This is a category of tools that would let a user sort through various options that they have in front of them, by making interactive comparisons using data points sourced from past users, expert analysis, and other track records. A choice engine is a digital experience, that could happen on a computer or on a mobile phone, and that lays out information — usually in a table or in a search interface — to let a person sort through a lot of information in a more categorized and directed way. In the ideal, a choice engine will let a user get an overview of what their choices are, and then use the tool to find which one would best fit their own preferences, by seeing how different options would actually affect them.
The value of the choice engine is that it allows a consumer not only to see the terms and conditions they would be agreeing to with a contract, but also to use data to compare, weigh, and understand outcomes these terms could have. Choice engines would show the disclosed information in relation to benchmarks and peer offerings. It might also give a predictive analysis, identifying the best action for the person to take.
B. Standardized industry-wide Nutrition Labels
The iconic nutrition facts label that the Food and Drug Administration requires of companies selling food products has inspired many other types of disclosure redesign. In the realm of data privacy, researchers have prototyped ‘nutrition labels for privacy’ that lay out key features and terms in a systematic grid for users to explore. The value of labels are that they are standardized across providers or companies, so that a user always knows where to look to find key information about a product, as well as how to read the disclosure effectively, because it is so familiar.
Interestingly, the label can also have the effect of setting a user’s expectation that there should be a disclosure in the first place, and that a responsible consumer would read and consider this disclosure as a part of their decision-making about whether and how to use this product. A nutrition label model could possibly set a ‘disclosure routine’, letting a person easily follow the same pattern of evaluating key terms and conditions, and relieving them of the difficulty of making sense of many individual types of design of disclosure. The standardized presence and composition of the disclosure can allow the user to go into ‘auto-pilot’ while assessing the product’s terms, and also makes it easy to compare products against each other.
C. Visceral Notice
Ryan Calo, a law scholar interested in improving data privacy notice, proposed that disclosure design move towards more “visceral notice”, involving other senses to have the communications resonate. This type of notice could include buzzing vibrations, or other physical kinds of interactions. It could include auditory notice, with beeps or other sounds that signify positive, negative or important things. Or, it could use other types of stimuli that catch the attention of our body’s senses, in ways that standard text does not. Some examples of visceral notice include speed bumps on roads, that tell a driver to slow down to be in compliance with the speed limit, or in a more digital environment, the app Privacy Bird, created by Carnegie Mellon University (though now phased out of use), that has a bird that chirps at the user whenever they visit a website that has privacy practices which diverged from their privacy preferences.
Another stream of projects and research has been about adding a visual layer to notices. This includes most prominently, the use of icons to capture and signify the contents of the disclosure text. The icons work as flags, to draw the user’s attention and then as shorthands, to summarize the main points of that part of the disclosure and hopefully to stick in the user’s mind as she makes decisions.
For example, in the domain of privacy notice, several groups have introduced icon sets to represent key parts of data privacy disclosures. Some of these initiatives have come from Mozilla, the designer Aza Raskin, and the Privicons.org project. Apart from privacy, there have been initiatives to create intellectual property-related icon languages by the USPTO working in conjunction with the design initiative the Noun Project. These various icon-based disclosures do not aim to be comprehensive replacements for text-based notices, but rather visual complements to make the text more engaging and more memorable. The icons tend to be simplified pictograms rather than detailed illustrations, with some standard shapes in combination to give a sense of what the text notices contain.
E. Staging a Disclosure Walkthrough
A final model that has been put forward as a more user-centered means of communicating legal and regulatory information is the ‘staged disclosure’. In this model, the text of the disclosure is reduced to simple, bite-size messages, and often accompanied with an image that reinforces this message. Then the messages are displayed sequentially, one-at-a-time, so that the user is taken through a journey of the disclosure rather than having a single list of all the parts of the communication.
A recent example of this method comes from healthcare, where SAGE Bionetworks invested in a user-centered design process to create a better way of notifying patients of what it means to give consent to medical procedures, and giving them information before they were asked for this consent. This method uses modern web and app design, so that each staged message appears as its own unique card — with large fonts, distinctive images, and high quality visual design. It is not merely breaking up text into paragraphs and having the user click through the paragraphs. Rather, it is creating a ‘walkthrough’ journey, with each part of the disclosure marked with distinctive imagery, a large takeaway message, and a feeling of progressive understanding as the user follows the path through the staged disclosure.
3. Design and Research Work
We began our process with consultations with our key partners in the class. From FINRA, Thomas A. Pappas, Vice President and Amy C. Sochard, Senior Director of FINRA’s Advertising Regulation Department, visited our class to answer questions about FINRA’s challenge around disclosures and the rules and constraints that it must work within. Alex Gavis, Senior Vice President & Deputy General Counsel of Fidelity Investments also visited the class to explain the disclosure process from a financial institution’s point of view. He explained how disclosure designs are created with different product and legal groups inside a company, and how interpretations and implementations of regulations influence and guide disclosure requirements and placement.
These introductory and exploratory discussions helped us understand the landscape of stakeholders that are involved in the creation, regulation, and consumption of financial communications.
(One short note — FINRA had asked us to look at the design of disclosures that could accompany ‘advertisements’ for financial investment products, but the term advertisement is used expansively. In effect, it is public-facing outreach by financial services companies about their investment products and services — and it includes websites and apps they publish regarding these products, in addition to more traditional ‘advertisements’ in print and television media).
The four key groups of stakeholders are as follows.
- The financial institutions making the communications,
- Consumers who potentially see them and use and act upon them as they consider investing money,
- The government regulators that set rules and uphold standards around how the companies can behave and how to protect consumers, and
- FINRA, as a non-governmental regulator which enforces both the federal government standards and its own conduct rules.
FINRA’s role involves ensuring that companies’ communications fall within the regulatory guidance and standards, as well as promoting transparent, predictable, and practical standards to the companies so that they can better understand whether their communications may cause any regulatory problems. These standards are intended to enhance understanding by investors and reduce the risk of rule violations by the companies. Violation of either the federal securities laws or FINRA’s conduct standards could have negative consequences for firms from the financial and reputational damage of a regulatory disciplinary action.
A financial services company’s interest may not be solely in making a short-term profit. Companies may want to attract more consumers, satisfy them, and maintain strong relationships with them over a long term.
In addition to our stakeholder interviews, our group also surveyed the literature for strategies to convey complex information in clear, engaging, and empowering ways. From this review, in combination with our initial discussions with subject matter experts and lay users, our class began to scope out what specific challenges and opportunities that we might focus upon during our design work.
We staked out some initial hypotheses about the dynamics between the stakeholders and some promising ‘what-ifs’ to explore as we created new concepts for communicating legal disclosure. These included: eliminating all fine print; integrating good decision-making education into the disclosure itself; and aiming for a balance of quantity of information disclosed, the contents of the information, and the design of the information.
Our consultations with FINRA also led the class to define a specific type of target user to consider, when creating new designs for disclosures. Our class chose to focus on millennial users, who were in between their early 20s and mid 30s, and who were relatively inexperienced in financial investments. This type of user was of interest to both FINRA and to the class because it seemed that traditional types of disclosures and outreach, in the form of print advertisements, paragraphs of text and footnotes, and even charts of data, did not resonate with them. The challenge is in how to engage this type of user in new, more resonant ways, so that they can effectively understand how to best choose financial investments to suit them.
User research with millennial audience
Once the class had selected the millennial demographic as its focus for disclosure redesign, we embarked on user research, using a mixture of methods: on-the-street interviews and in-person focus groups. The purpose of the research was to determine:
- Current behaviors around investment and disclosures: How various millennials made decisions about financial investments, and responded to outreach and disclosures by financial investment companies (if at all).
- Communication preferences: What types of communication they respond to, what types of devices and experiences they are currently engaged with, and what types of designs they prefer.
- Prioritization of factors: What parts of the typical disclosure content for financial investment is of greatest priority when making financial decisions.
- Trust: What kinds of sources and presentations already instill trust (and engagement) — whether specifically around financial decision-making, or other complex decisions?
We explored these questions with a wide range of millennials via two methods. First, we conducted on-the-street interviews, in which we approached a range of people on the Stanford campus to ask them in 5-10 minute discussions about their behaviors and preferences. This initial pass of conversations was meant to surface some themes and general reactions, that we could then use to direct our more structured research. Our second method was to recruit ten millennials from around the Bay Area to sit down for 30-50 minute semi-structured interviews. In these sessions, the class groups spoke with one or two participants at a time, in depth about their behaviors and their needs around financial investment decision-making, and their relationship with various disclosures. These discussions allowed our class to test our first hypotheses about what the current fail-points are with status quo disclosures, and to get early reactions to some of the new concepts we were considering.
The findings that emerged from the research are summarized below. We include some images of our synthesis process, as we shared out our notes from the research and listed out common, prominent themes.
Some common themes in user’s discussion of financial investment decision-making is that they don’t read disclosures currently, though they are hungry for trusted sources to guide them because they have low confidence in their own ability to navigate these decisions. They want better tools to make these decisions, and currently they try to do this by going through personal networks, online peer-to-peer networks like YouTube and blogs, or massive Google searches that they search through.
We also learned that there is a common track that the users went through regarding financial decision-making. There were two phases. First: ‘Education,’ in which they started to learn about this topic and make sense of the terminology, offerings, and factors they should consider. Second: ‘Decision-making,’ in which they began to think more concretely about what decision would best suit them and craft a strategy to decide exactly how to behave. This process-view of the situation revealed the question of whether there could be different kinds of regulatory communications or disclosures for these different touchpoints. Also, it raised the question of when the typical disclosure about terms and conditions is most useful to the user — is it during early education, as they are making sense of their options, when they are shopping and comparing opportunities, or just as they are deciding (or even after they have decided)?
The research also revealed the importance of online resources. Our users relied on Google, blogs, YouTube, and other online ‘research’ tools for education and background information leading up to decision-making. They were also using (or interested in using) app-based investment tools that dramatically streamlined the process or had modern, clean user interfaces, like Acorn and Robin Hood. They sought out ‘wisdom of the crowds’ online, to see what was normal and average, and felt they could rely on that. They also expressed trust for parents, friends, and their current banks. They did not want to engage with financial companies directly, because they did not feel they could trust information coming directly from the companies providing the investment products.
Key Takeaways from initial User Research
The most important themes from our class’s initial user research into millennials’ behavior and preferences regarding financial investment disclosures can be summarized into a series of points.
Lack of engagement with current disclosures: “they’re not for me”
Lay people will hardly ever (if never) click to look at the fine print or disclosures. They will not choose to peruse, or even glance at, the policy document, the contract, or the paragraphs of disclosures.
The respondents think that disclosures (as they are currently communicated) are for regulators and other lawyers. They do not consider themselves the target audience for this communication. It is for ‘lawyers, from lawyers’. Accordingly, they don’t engage with the communication. They don’t think it is speaking to them, or that it is worth their attention. Put simply, they think “disclosures are not for me.”
There is a self-confidence gap around wise decision-making
The participants did not feel that they knew enough about financial matters to make wise decisions. That didn’t lead them to read disclosures or other fine print from companies, though. Rather, it made them reach out to other sources, like family, friends, blogs, YouTube videos, and online forums, in order to build their knowledge. This lack of confidence was not necessarily grounded in truth, either. When one team tested focus group members using FINRA’s Investor Quiz, to assess their knowledge about investing, the participants scored well, though they doubted their own knowledge and ability. This lack of confidence made them cautious about making investments, and more likely to reach out to social networks and third-party authorities to guide them in their behavior. It did not lead to their engagement with fine print or other mandatory disclosures.
Search for a trusted advisor
Many people in our focus groups reported that they wish they had a ‘trusted advisor’ in the area of financial investments. When asked for examples of who this advisor might be, they referenced a parent, a knowledgeable friend, or the collective of their online social networks. Others mentioned banks, universities, or employers, that they would trust what these institutions, with which they had long-term relations, had to recommend to them for investments. Another possible source of trusted advisors was online, in the form of experts who blogged, wrote articles, created comparison tools, or provided media-based guides to smart investment.
Hunger for useful, neutral information through Internet searches (but not disclosures)
One of the most surprising findings from our focus group interviews was that users had a strong hunger for in-depth, complex information about how their potential financial investments will work, what the drawbacks and advantages of different plans are, and how they should evaluate different options. This hunger does not translate into engagement with disclosures. Among several of our participants, this manifested as extensive Internet searches and reading for third-party neutral information. The participants did not necessarily discriminate about where they read information, based on source, but rather read voraciously from blogs, public forums, magazines and newspapers, and YouTube. Their strategy was to consume as much conversation and advice about financial investment strategies, and then to sift through the information looking for common themes. Essentially, these types of users reasoned that they are smart Internet searchers, consumers, and sifters, so they relied upon these skills to provide them guidance enough to understand investing.
Interestingly, they did not consider companies’ disclosures as part of the reading they would do in their information search, or as a final thing to check before making their investment choice. This is a paradox that our research and development aimed to tackle: how do we engage users with the content of the disclosures, when they are hungry for this kind of information but don’t find the disclosures (at least in their current design and context) worth looking at? They do not see terms and conditions, policies, or footnote disclosures, as speaking to them — so what kind of presentation would make them tune in?
Graphs and charts often undermine the communication
Many of our participants, particularly those who were ‘rookie’ investors and not confident in financial matters, were put off by communications that included charts and graphs about financial performance of investment products. They did not find these visuals legible. Rather, they indicated it took too much mental effort and background research to understand what these types of visuals were actually communicating, and how it should affect their decision-making.
Value on the political and social impact of finance
Another theme from the focus groups was the importance of values and sustainability in the investment decisions. Some of our participants wanted insights into how their potential investment would be spent, and the political, environmental, and other values-based dynamics of an investment. The participants wished there were more disclosures and transparency around these dimensions of investments.
Persona Archetypes and Design Briefs
These findings about millennials’ relationship to information disclosures and financial investments shaped two of our design deliverables: first, personas that summarized the archetypal users our concept designs would target, and second, the design briefs that define the challenge for disclosure design for this particular user.
The groups’ personas were all variations of a millennial relatively inexperienced with financial investments. Each of the groups focused on a U.S. millennial in their mid-20s, at the start of their career, with an interest in investing but a lack of confidence about how to do so intelligently. This archetypal user aspired to be more self-sufficient and to make decisions that would give her more choice and confidence in her future. She knows she wants to start planning to obtain her future goals around travel, building a family, having a house, and other large expenses that seem somewhat far away, as well as for retirement, which seems quite distant. She is a quick learner, who can use technology without fear and feels confident in her ability to search and sort to find good answers. But she is also busy, and does not want to feel as if she is wasting time or drowning in details that don’t directly make her more strategic about her decisions. She has a strong online network, a close group of family members whom she speaks with about life decisions and ‘adult’ topics, and feels comfortable talking about her income and finances within her network of family and close friends.
This user archetype was then the basis for the groups to create scoped versions of the class’s initial challenge: of how to improve the millennial’s engagement with and use of disclosures around financial investments. The scoped challenge statements were framed as design briefs that each of the three design groups began brainstorming with, as a springboard to new concept designs. The three design briefs were as follows:
- How might we help an easy-going woman who is procrastinating on income management and just enjoying life to develop a strategic financial plan, when she has no idea about her financial needs and is avoiding the learning process?
- How might we help a young professional with limited investment experience match his independent investment selections with his preferences, in light of the investor’s belief that disclosures are not for him?
- How might we help a well-educated, digitally savvy, financially resourceful first-time investor achieve financial literacy and feel confident making financial decisions while supporting them to find investments that meet their risk tolerance and needs, without affecting their autonomy?
These design briefs all point to improved decision-making for millennials considering making their first financial investments, but take slightly different emphases. The first brief took the position that a focus on basic education was a necessary precursor to any effective disclosure, and so took a wider view of what types of interventions would be needed to lead to improved disclosures. The second brief is more concerned directly with creating ways to help the user make sense of options and choose the best one. The third tries to weave the concerns together, recognizing the need for both foundational educational interventions, tied into direct decision-making tools.
 Omri Ben-Shahar and Carl Schneider, “The Failure of Mandated Disclosure,” 2010, U of Chicago Law & Economics, Olin Working Paper No. 516.
 Richard Thaler and Will Tucker. “Smarter Information, Smarter Consumers,” Harvard Business Review. Jan-Feb 2013. https://hbr.org/2013/01/smarter-information-smarter-consumers
 Angela Hung, Min Gong, Jeremy Burke, “Effective Disclosures in Financial Decisionmaking,” July 2015, DOL, RAND Labor and Population, https://www.dol.gov/ebsa/pdf/conflictofinterestresearchpaper3.pdf
 Kleimann Communication Group, “Web-based Financial Privacy Notice: Final Summary Findings Report,” 2009, https://www.ftc.gov/system/files/documents/reports/model-form-rule-research-report-creating-web-based-model-form/model_form_rule_research_report_on_creating_a_web-based_model_form.pdf
 Omri Ben-Shahar and Adam S. Chilton, “Simplification of Privacy Disclosures: An Experimental Test,” (April 13, 2016). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 737. Available at SSRN: http://ssrn.com/abstract=2711474
 Florian Schaub, Rebecca Balebako, Adam L. Durity, Lorrie Faith Cranor, “A Design Space for Effective Privacy Notices,” Symposium on Usable Privacy and Security 2015, July 22-24, 2015. Available at https://www.usenix.org/system/files/conference/soups2015/soups15-paper-schaub.pdf
 Stefania Passera and Helena Haapio, “User-Centered Contract Design: New Directions in the Quest for Simpler Contract,” http://www.slideshare.net/StefaniaPassera/passera-iaccm-presentation 2011.
 Stefania Passera and Helena Haapio, “Enhancing Contract Usability and User Experience Through Visualization,” SHOK Summit 2012, April 25, 2012.
 Thaler and Tucker, see footnote 7 above.
 Patrick Kelley, J. Bresee, J., Lorrie Faith Cranor, and Robert W. Reeder, “A ‘nutrition label’ for privacy,” 2009, in Proceedings of the Symposium on Usable Privacy and Security: SOUPS 2009.
 Ryan Calo, “Against Notice Skepticism In Privacy (And Elsewhere),” March 20, 2011, 87 Notre Dame Law Review 1027, Available at SSRN: http://ssrn.com/abstract=1790144
 http://sagebase.org/platforms/governance/participant-centered-consent-toolkit/ and for background on the design process, see http://www.slideshare.net/wilbanks/patientcentered-consent