Do investors understand structured deposits?

Framing Effect and Financial Products
Intervention Financial Products

Intervention Desrciption

Researchers administered a series of financial tasks to a group of 384 investors where they were shown several structured deposits, asked to evaluate them, and rank the deposits against some fixed standards. They were shown the deposit information in one of three ways: scenarios (payout for given stock market performances), scenarios and charges (scenarios and the implicit charges), and payout (expected payout based on a model). They found that investors value investments differently based on which format of disclosure they received; futthermore, they concluded that investors generally have limited understanding of structured deposits. As a result, they recommend providing more transparent information on products to investors.