Consumer testing services : retail investors’ preferred option regarding performance scenarios and past performance information within the Key Information Document under the PRIIPs framework : executive summary.
Date: 2020-04-08
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union
Subjects: EU Member State, consumer information, consumer survey, disclosure of information, financial services, insurance, regulation of investments

Consumer testing services - Retail 
investors’ preferred option regarding 
performance scenarios and past 
performance information within the Key 
Information Document under the 
PRIIPs framework 

FISMA/2019/016/C 

Executive Summary 

Written DevStat 
February 2020 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Financial Stability, Financial Services and Capital Markets Union (FISMA) 
Unit C4 – Asset Management 

E-mail:  FISMA-C4@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Consumer testing services - Retail 
investors’ preferred option regarding 
performance scenarios and past 
performance information within the Key 
Information Document under the 
PRIIPs framework 

FISMA/2019/016/C 

Executive Summary 

February 2020 

EV-02-19-524-EN-N 

Directorate-General for Financial Stability, 
Financial Services and Capital Markets Union (FISMA)   

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Luxembourg: Publications Office of the European Union, 2020 

ISBN 978-92-76-08884-4 

doi:10.2874/545138 

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Reproduction is authorised provided the source is acknowledged. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DISCLAIMER 

The information and views set out in this study are those of the author(s) and do not 
necessarily  reflect  the  official  opinion  of  the  European  Commission.  The  European 
Commission  does  not  guarantee  the  accuracy  of  the  data  included  in  this  study. 
Neither  the  European  Commission  nor  any  person  acting  on  the  European 
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information contained therein. 

February 2020                                                                                                                                  2 

 
 
 
 
1.  Background and purpose of the consumer test 
Regulation (EU) No 1286/2014 on key information documents for packaged retail and 
insurance-based  investment  products  (‘PRIIPs  Regulation’)  and  its  implementing 
measures  laid  down  in  Commission  Delegated  Regulation  (EU)  2017/653  (‘PRIIPs 
Delegated  Regulation’)  determine  the  format,  content  and  calculation  methodologies 
of  the  key  information  document  (KID)  for  packaged  retail  and  insurance-based 
investment  products  (PRIIPs)  to  be  made  available  to  retail  investors.  These  rules 
apply from 1 January 2018. With the overall aim of improving the effectiveness of the 
PRIIPs  KID,  i.e.  retail  investors’  understanding  of  information  provided  in  the  PRIIPs 
KID  as  well  as  product  comparison  between  and  selection  of  different  investment 
products, the European Commission, in close cooperation with the ESAs, has proposed 
different options for the presentation of performance scenarios within the PRIIPs KID. 
The Commission requested DevStat’s assistance in carrying out a consumer test of the 
proposed  options.  The  results  of  this  consumer  test  of  performance  scenarios  in  the 
KID will feed into the ESAs’ review of the PRIIPs Delegated Regulation and will be used 
as  important  evidence  during  the  review  of  the  PRIIPS  Delegated  Regulation. 
Consequently,  the  general  objective  of  this  project  is  to  test  the  effectiveness  of 
different  content  and  formats  for  presenting  information  on  past  performance  and 
potential  future  performance  (performance  scenarios)  of  PRIIPs  so  that  this 
information can be as useful and as well understood as possible by retail investors. 

2.  Methodology of the consumer test 
The  consumer  test  covered  11  example  products  of  three  types:  funds,  structured 
products  and  insurance-based  investment  products  (IBIPs).  The  following  four 
versions of the KID were analysed: 

  Current KID version. This version includes information on stress, unfavourable, 
moderate  and  favourable  performance  scenarios  over  three  time  periods.  This 
version can be applied to funds, structured products and IBIPs.  

  Probabilistic  approach  KID  version.  In  this  alternative  version,  the  stress 
scenario  is  replaced  by  a  minimum  scenario.  Moreover,  the  performance 
information 
intermediate  time  periods,  and  probabilistic 
information  is  given  on  the  unfavourable,  moderate  and  favourable  scenarios  at 
the end of the recommended holding period. Probabilistic information is framed as 
‘XX in 10 chance of doing worse’ than the performance scenario. This version can 
be applied to funds, structured products and IBIPs. 

is  removed 

for 

  Past  performance  KID  version.  This  version  includes  all  the  variations 
introduced  in  the  probabilistic  approach  version  but  also  adds  information  on the 
performance of the product over the last 10 years. This version can be applied to 
funds and IBIPs.  

  Illustrative  scenario  KID  version.  This  version  offers  all  the  variations 
introduced in the probabilistic approach version but also adds specific performance 
examples  to  show  the  rules  defining  each  structured  product.  This  version  can 
only be applied to structured products. 

The  test  was  carried  out  online.  The  final  sample  consisted  of  7,684  subjects. 
Participants were those responsible or jointly responsible for the financial decisions of 
the  household.  The  test  covered  France,  Germany,  Italy,  Poland  and  Sweden.  This 
selection  of  countries  guaranteed  a  balanced  representation  of  Member  States 
covering  retail  investors  from  different  regions  of  the  EU.  Participants  were  recruited 
online and were randomly assigned to combinations of example products and versions 
of the KID, thereby fulfilling quotas by country, sex, age and education level for each 
combination.  The  average  time  to  complete  the  test  was  22.7  minutes.  The  most 

February 2020                                                                                                                                  3 

common  respondent  profile  was  employed  (50.2%),  married  (47.9%)  and  saving  for 
specific goals (74.0%). 

After  recruitment  and  random  assignment  to  combinations  of  products  and  KID 
versions, the consumers completed the test questionnaire, which consisted of different 
tasks. First, the consumers observed a pair of products (of the same type or different 
types). They then selected one to invest and were also asked to identify products with 
specific features (product selection and identification questions). Next, the consumers 
answered  a  series  of  questions  on  the  features  of  the  product  (understandability 
questions). Finally, the consumers completed a sociodemographic questionnaire and a 
financial literacy questionnaire. 

3.  Main findings of the consumer test 
The  participants  generally  made  good  investments  decisions.  More  than  two  thirds 
selected the optimal investment product from pairs of products of the same type 1 for 
all  types  of  products  and  versions  of  the  KID.  Investment  decisions  were  slightly 
better  for  funds  (72–75%  of  participants  selected  the  optimal  fund)  and  IBIPs  (71–
75%) than for structured products (68–71%).  

However,  consumers  seemed  to  struggle  to  identify  a  product  based  on  its  specific 
features and to answer the understandability questions correctly. With few exceptions 
across all KID versions and product types, less than half of the respondents were able 
to  identify  the  product  with  the  most  unpredictable  returns,  the  product  with  the 
highest  expected  return  or  the  product  that  guaranteed  a  positive  return  or 
guaranteed  investors  their  money  back.  This  low  proportion  of  correct  product 
selection  was  observed  when  comparing  products  of  the  same  type  and  of  two 
different  types.  Moreover,  with  few  exceptions,  less  than  half  of  the  participants 
correctly answered the understandability questions.  

3.1  Impact  of  the  probabilistic  approach  (funds,  structured  products 

and IBIPs) 

3.1.1  Selection and identification of financial products 

The percentage of consumers who selected the optimal investment product from a pair 
of products of the same type was similar when the information was presented with the 
current version of the KID and with the probabilistic approach version of the KID. 

It  is  not  possible  to  identify  an  objectively  optimal  investment  decision  when  dealing 
with  two  products  of  different  types.  However,  it  is  possible  to  assess  how  the 
probabilistic  approach  affects  the  correlations  between  the  features  of  the  selected 
investment product and the risk preferences of the consumers. Although this analysis 
reveals  no  general  trends,  some  interesting individual  findings  should  be  highlighted. 
For funds and structured products, use of the probabilistic approach version seemed to 
make identifying investment products based on their volatility more difficult than with 
of  the  current  version.  However,  probabilistic  information  seemed  to  aid  the 
participants’  understanding  of  the  probability  of  losses  when  comparing  funds  with 
IBIPs and structured products  with IBIPs. No conclusion  may be drawn regarding the 
impact of skewness preferences. 

1 When participants were asked to select an investment product from a pair of products of different types, it 
was not possible to identify which was the optimal selection, given that there was not an objectively better 
product.  

February 2020                                                                                                                                  4 

                                           
The  probabilistic  approach  version  of  the  KID  improved  the  identification  of  the 
products  based  on  their  specific  features  when  comparing  products  of  the  same  type 
or of different types. The probabilistic approach version of the KID helped participants 
identify  the  product  with  the  most  unpredictable  returns  when  comparing  a  fund  and 
an IBIP and the product with the highest expected returns when comparing two IBIPs. 
Crucially,  the  probabilistic  approach  version  of  the  KID  included  information  on  the 
minimum performance scenario. The level of understanding of this information can be 
assessed through consumers’ selection of products in terms of the guaranteed returns 
at the end of the recommended holding period. Table 1 shows that the identification of 
the correct product in terms of its guaranteed conditions was 7 or 8 percentage points 
higher  for  funds  when  the  probabilistic  approach  version  was  used.  A  statistically 
significant,  but  weaker,  impact  was  observed  for  IBIPs.  Moreover,  the  probabilistic 
approach  never  had  a  negative  influence  on  the  proportion  of  participants  who 
correctly identified a product.  

Table 1. Impact of the probabilistic approach version on product selection in terms of 
guaranteed returns at the end of the holding period* 

Question 

Type of product 

(1) % of correct 
answers with the 
current KID 

(2) % of correct 
answers with the 
probabilistic 
approach KID 

Percentage point 
difference in the 
% of correct 
answers with 
each version 
(2) – (1) 

QT1.4. Looking at the information sheets above for Product A and Product B, in your opinion, with 
which product are you guaranteed that you get… 

QT1.4a. …a positive return at the end of the recommended holding period (i.e. an amount in addition to 
what you invested)? 

Funds 

QT1.4a  

Structured products 

IBIPs 

23.75 

25.06 

22.71 

30.94 

27.47 

28.23 

QT1.4b. …back the money you invested at the end of the recommended holding period? 

Funds 

QT1.4b  

Structured products 

IBIPs 

23.99 

24.07 

42.25 

32.31 

27.28 

40.45 

*Bold numbers for statistically significant differences with p-value < 0.05. 

7.19 

2.41 

5.52 

8.32 

3.21 

-1.8 

3.1.2  Understandability questions 

In  the  probabilistic  approach,  one  of  the  key  changes  with  respect  to  the  current 
version of the KID is the inclusion of probabilistic information on the likelihood of the 
unfavourable,  moderate  and  favourable  performance  scenarios  at  the  end  of  the 
holding  period.  A  clear  way  to  assess  the  level  of  understanding  of  this  new 
information  is  through  analysis  of  the  understandability  questions  on  the  number  of 
times  out  of  100  that  the  value  of  the  investment  will  be  above  the  favourable 
scenario. The introduction of the probabilistic information increased the percentage of 
correct answers by 11 percentage points for IBIPs, 9 percentage points for funds and 
4 percentage points for structured products.  

The  current  version  of  the  KID  includes  information  on  the  stress  scenario,  which  is 
not  included  in  the  probabilistic  approach  version.  The  understandability  question  for 
the  stress  scenario  was  correctly  answered  by  only  26%  and  29%  of  participants  for 
funds and structured products, respectively2.  

2 This question was not answered for IBIPs. 

February 2020                                                                                                                                  5 

                                           
The probabilistic approach (with or without additional information on past performance 
or  an  illustrative  scenario)  generally  had  a  positive influence  on  understandability  for 
funds  and  IBIPs.  For  both  types  of  products,  all  alternative  scenarios  that  included 
such  information  increased  the  accuracy  of  answers  to  the  understandability 
questions.  

3.2  Impact of the information on past performance (funds and IBIPs) 
For funds, only one past performance version of the KID was considered. This version, 
referred  included  the  annual  percentage  of  losses  or  gains  over  the  last  10  years 
against  a  benchmark  index.  In  the  case  of  IBIPs,  two  different  past  performance 
versions  of  the  KID  were  tested.  The  first,  referred  to  in  this  report  as  past 
performance with two elements, presented information on past performance over the 
last 10 years in terms of the minimum annual bonuses and the return on government 
bonds  as  a  benchmark.  The  second  version,  referred  to  in  this  report  as  past 
performance with three elements, included over 10 years the investment returns of an 
underlying  fund,  the  minimum  annual  bonuses  and  the  return  on  government  bonds 
as a benchmark. 

3.2.1  Selection and identification of financial products 

Selection of an investment product 

Presenting  the  product  information  using  the  current  version  of  the  KID  or  the  past 
performance  version  of  the  KID  did  not  have  a  statistically  significant  impact  on  the 
selection of optimal investment products of the same type.  

For  products  of  different  types,  the  impact  of  the  past  performance  information  can 
only  be  assessed  through  analysis  of  the  relationship  between  the  features  of  the 
selected  product  and  the  risk  preferences  of  the  consumers.  Although  this  analysis 
revealed  no  general  trend,  it  is  worth  noting  some  individual  findings  from  the 
comparison  of  funds  and  IBIPs  using  past  performance  KID  versions.  First,  the 
percentage  of  risk-averse  consumers  who  selected  the  product  with  the  highest 
volatility was lower for  the past performance versions (31–38%) than  for the current 
version (49%). Second, when the past performance versions were used to present the 
features  of  both  the  fund  and  the  IBIP,  29%  to  39%  of  consumers  with  high  loss 
aversion  selected  the  product  with  the  higher  loss  probability;  in  contrast,  when  the 
current  version  was  applied,  this  percentage  was  55%.  These  results  suggest  that 
using the past performance versions of the KID may help consumers select funds and 
IBIPs according to their risk and loss preferences. 

Identification of a financial product based on its features 

As shown in Table 2, the percentage of correct identification of a fund guaranteeing a 
positive  return  and  guaranteeing  that  investors  would  receive  their  money  back  was 
higher  when  applying  the  past  performance  versions  (30–31%)  than  when  applying 
the  current  version  (24%).  However,  the  impact  of  the  past  performance  versions  of 
the KID on the selection of a product in terms of it guaranteed conditions was mixed 
for  IBIPs,  since  it  improved  the  identification  in  terms  of  the  guaranteed  positive 
returns but not in terms of getting the invested money back.  

For the specific case of IBIPs, the inclusion of past performance information with three 
elements reduced the percentage of consumers who identified the optimal investment 
product  by  4.5  percentage  points  with  respect  to  the  probabilistic  approach  version. 
Similar reductions were observed for the identification of the product with the highest 
expected  returns  (5.3  percentage  points)  and  identification  of  the  product  that 
guaranteed investors that they would get their money back (4.5 percentage points).  

February 2020                                                                                                                                  6 

Table 2. Impact of past performance versions on product selection in terms of guaranteed 
returns at the end of the holding period* 

Question 

Type of product (KID 
version) 

(1) % of correct 
answers with 
the current KID 

(2) % of correct 
answers with 
the past 
performance 
KID 

Percentage 
point difference 
in the % of 
correct answers 
with each 
version 
(2) – (1) 

QT1.4. Looking at the information sheets above for Product A and Product B, in your opinion with which 
product are you guaranteed that you get… 

QT1.4a. …a positive return at the end of the recommended holding period (i.e. an amount in addition to 
what you invested)? 

Funds (past performance) 

23.75 

QT1.4a  

IBIPs (past performance 
with 2 elements) 
IBIPs (past information 
with 3 elements) 

22.71 

22.71 

30.64 

32.21 

29.86 

QT1.4b. …back the money you invested at the end of the recommended holding period? 

Funds (past performance) 

23.99 

QT1.4b  

IBIPs (past performance 
with 2 elements) 
IBIPs (past performance 
with 3 elements) 

42.25 

42.25 

29.83 

37.09 

35.93 

*Bold numbers for statistically significant differences with p-value < 0.05. 

6.89 

9.5 

7.15 

5.84 

-5.16 

-6.32 

3.2.2  Understandability questions 

The past performance version improved the understanding of the products in term of 
the likelihood of the future performance scenarios. 

The  test  included  specific  questions  to  be  asked  for  each  past  performance  version. 
The responses to these questions indicate that participants used past information with 
caution and, therefore, the presentation of past and future information together does 
not  seem  to  raise  issues.  Around  two  thirds  of  the  respondents  considered  that  it  is 
not  possible  to  predict  the  likelihood  of  future  returns  accurately  because  the  future 
may  differ  from  the  past  (66%  for  funds;  63%  -  64%  for  IBIPs).  However,  when  we 
asked  more  specifically  about  the  relevance  of  the  past  performance  for  future 
outcomes,  responses  were  more  varied  and  a  significant  proportion  of  participants 
indicated  that  they  made  a  connection  between  past  performance  and  the  potential 
future performance.   

3.3  Impact of illustrative scenarios (structured products)   
The  inclusion  of  additional  information  on  illustrative  scenarios  did  not  seem  to  be 
processed or used by consumers when dealing with structured products. This finding is 
perhaps also a consequence of the higher complexity of structured products. 

3.3.1  Selection and identification of financial products 

Selection of an investment product 

February 2020                                                                                                                                  7 

 
 
 
 
The  percentage  of  consumers  who  selected  the  optimal  structured  product  for 
investment  (68–71%)  was  slightly  lower  (although  not  statistically  significantly)  with 
the  illustrative  scenario  version  than  with  the  current  version  of  the  KID  or  the 
probabilistic approach version of the KID. No general trends were observed regarding 
the  impact  of  the  illustrative  scenario  version  on  the  selection  between  a  structured 
product and a fund or IBIP.  

Identification of a financial product based on its features 

There  were  no  differences  in  product  selection  between  the  illustrative  scenario 
version of the KID and the current version of the KID. The only exception was a small 
difference  in  the  percentage  of  participants  who  selected  the  structured  product  that 
guaranteed investors that they would get their money back (24% of correct selections 
with the current version versus 29% of correct selections with the illustrative scenario 
version).  

3.3.2  Understandability questions 

The  illustrative  scenario  version  of  the  KID  had  no  statistically  significant  impact  on 
the  accuracy  of  the  answers  to  the  understandability  questions  as  a  whole.  The  only 
items for which the percentage of correct answers was statistically significantly higher 
for  the  KID  version  with  illustrative  scenarios  than  for  the  current  KID  version  were 
the questions on the likelihood of the performance scenarios. Because the KID version 
with  illustrative  scenarios  also  included  probabilistic  information,  the  improvement  in 
these answers may be attributed to the inclusion of the probabilistic information rather 
than the illustrative scenarios.  

4.  Conclusions 
Although the results of this consumer test suggest that the final investment decision is 
not affected by the KID version, the results show that the design of the KID can play 
an  important  role  in  aiding  consumers’  understanding  of  the  features  of  retail 
investment products and in contributing to better informed financial decision making. 
The test provides empirical evidence to answer three main research questions: 

Question  1.  Does  the  probabilistic  approach  version  of  the  KID  perform  better  than 
the current version of the KID? Although only a small segment of consumers seemed 
to understand the probabilistic information on the likelihood of different scenarios, the 
inclusion of this information in the KID increased the percentage of correct answers to 
relevant questions on product selection. Therefore, it may be beneficial to incorporate 
in the KID features from the probabilistic approach. However, because the percentage 
of consumers that seemed to understand the probabilistic information presented in the 
KID  was  small,  it  may  be  advisable  to  consider  alternative  ways  of  framing  this 
probabilistic information.  

Question  2.  Is  it  helpful  to  add  information  on  the  past  performance  of  funds  and 
insurance products? The application of the past performance version of the KID, which 
also included probabilistic information, improved the level of accuracy of the answers 
with  respect  to  when  the  current  version  of  the  KID  was  applied.  Moreover, 
participants  seemed  to  distinguish  between  past  and  future  performance  of  the 
products and understand that future performance cannot be accurately predicted from 
information  on  the  past.  However,  the  impact  of  past  performance  was  not  tested 
independently of the probabilistic information, which makes  it difficult to discriminate 
between  the  relative  contribution  of  each  type  of  information.  The  test  provides 
evidence  that  the  inclusion  of  past  performance  information  has  no  negative  effect 
regarding funds and, when the simpler (two-element) version is considered, regarding 
IBIPs. However, the addition of more complex past performance information (i.e. past 

February 2020                                                                                                                                  8 

performance  with  three  elements  regarding  IBIPs)  may  have  negative  implications, 
probably because of the increase in the cognitive load placed on respondents. 

Question 3. Is it helpful to add illustrative scenarios for structured products? The test 
provides  no  significant  evidence  to  support  the  inclusion  of  illustrative  scenarios. 
Despite  some  improvements  in  consumers’  understanding  of  product  features  when 
the  KID  version  with  illustrative  scenarios  was  applied,  these  improvements  could 
reasonably be attributed to the probabilistic information also included in this version of 
the KID.  

February 2020                                                                                                                                  9 

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         doi:10.2874/545138 
         ISBN 978-92-76-08884-4