The real price of being too nice:How your personality impacts

your finances

A report by GoCompare and Dr Joe Gladstone, academic researcher in consumer behaviour at University College London

To find out more, visit www.GoCompare.com/BeatTheBills

Bills – they’re inevitable.

But it doesn’t mean we have to like them and there’s no excuse for overpaying each month.

There could be significant savings to be made by ditching and switching to another provider – those who have never switched their energy tariffs, car and home insurance are collectively worse off by up to £2bn each year, according to GoCompare’s research.

But what if our personality type was behind our decision to switch or stick with a provider?

We’ve commissioned a report to look at how different types of people interact with the financial services industry and how this affects their propensity to switch and save.

The results, which we’ll delve into a little deeper later on, are a revelation.

Introduction

The findings outlined in this report were collected and analysed in partnership with Dr. Joe Gladstone, academic researcher in Consumer Behaviour at University College London (UCL). Dr. Joe Gladstone is a world-leading expert in how people make financial decisions. Prior to joining UCL, Dr. Gladstone was the Fox Fellow at Yale University, and received his PhD from the University of Cambridge. Dr Gladstone’s research has been published in some of the world’s most prestigious academic outlets. Joe’s award-winning research investigates how consumers psychological biases influence how they spend money, and aims to help people make better financial decisions.

His expertise is highly sought-after and celebrated - Forbes Magazine recognised his achievements and named him one of its 30 under 30 in Finance, and his consumer behaviour insights have been featured on the BBC, Huffington Post and much more.

GoCompare has teamed up with Joe to analyse consumer behaviour towards financial products, with an aim to help everyone, everywhere save money.

The results of Joe’s tests are within this report.

Find out more about Joe Gladstonehttps://www.mgmt.ucl.ac.uk/people/joegladstonehttp://www.joegladstone.com/https://www.linkedin.com/in/jjgladstone/

• Conscientious and organised people are more likely to switch, but those who are warm and kind (i.e. ‘agreeable’ types) are more likely to stay put with their current provider.

• People paying monthly (rather than annually) for products are up to 33% less likely to switch.

• Those with higher incomes are more likely to switch compared to people with lower incomes.

• Those already in debt tend to avoid opening their bills each month. They also look at bills for a shorter amount of time and remember less information from them.

• Often, those with the most to gain by switching are the least likely to switch.

• Childhood economic conditions significantly predict a person’s switching rate.

• Insurance renewal letters featuring FCA transparency rules can increase people’s likelihood to shop around – especially if the year-on-year increase in premiums is large. However, their effectiveness could be limited because financially distressed people are less likely to review bills and official notices

Here are the headlines...

With uncertain times ahead, it’s never been more important for people to take control of their finances and make the most of their money. So, ditching the overinflated bills which make up a chunk of their monthly outgoings is a top priority, particularly costly energy tariffs, home insurance and car insurance. But surprisingly people aren’t too eager to switch.

In one of the most comprehensive studies of its kind, GoCompare commissioned research from Populus to show just how much sticking with their existing provider costs households each year…

This means that people who have never switched their car insurance, home insurance or energy are a combined a year worse off than those that do switch.£2,056,871,000

The true cost of not bothering with your bills

But why are so many people choosing to throw away their cash? Could it be that they’re victims of their own good nature?

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18%of car insurance policy

holders have never switched

£526,781,000* wasted

28%of households with a

home insurance policy have never switched

£598,544,000* wasted

32%of households have never

switched their gas and electricity supplier

People paying monthly (rather than annually or

quarterly) are up to

£931,546,000* wasted

33%less likely to switch

*Research conducted by Populus on behalf of GoCompare. Populus interviewed a nationally representative sample of 5,000 online respondents aged 18+ in Great Britain between 16 and 21 May 2017. Figures shown are ‘up to’ savings and rounded.

We will automatically renew your car insurance on 29/07/2017

Last year you paid £416

Your quote from the upcoming year is £462

You have been with us for a number of years. You may be able to get the insurance cover you want at a better price if you shop around.

Insurance Renewal

We will automatically renew your car insurance on 29/07/2017

Last year you paid £323

Your quote for the upcoming year is £462

You may be able to get the insurance cover you want at a better price if you shop around.

Insurance Renewal

The Financial Conduct Authority (FCA) regulates financial firms and markets in the UK. In April 2017, it told insurers to show customers how much more they were charging year-on-year on their renewal letter. Insurers also now have to use prescribed wording to point out to customers who have been with them for more than four years that they may be able to get the cover they want at a better price if they shop around. Dr Gladstone tested the effectiveness of this approach.

Let the experiment begin!

Participants in the study were given one of three example renewal letters to read. Based on the information in the letter, they had to decide if they’d switch insurers, or not.

Prompts promote switching

Which letter made people want to shop around more?

• When they had evidence of the price hike in black and white, people were up to 10.5% more likely to shop around.

• Adding specific messages about ‘shopping around’ to letters is effective at encouraging people to want to switch providers. This is the case even after just one year with the current provider.

• In the tests without the shopping around messages, people were 5.6% less likely to shop around.

• But even supplying this information won’t help everyone find a better deal – those in financial distress may not open the bill, or retain the message in it.

Percentage that wanted to switch

Monster price hikeSmall price hikeLast year’s premium omitted

95%89%86%

100%

0%

In this experiment, both financially distressed and unstressed participants were presented with a bill and asked to remember as much information as they could from it. We were able to record the sections of the bill that received the most attention and the average time different groups of people spent looking at the bill.

Ignorance is bills

Financially distressed people spend less time

checking their bill and only 68% remember the balance

due accurately.

Financially stable people spend more time

reading their bill and 81% say they remember the bill

balance correctly.

I sometimesdon’t open my bills...

54secs

37secs

Financial distress makes us misera-bill

Our research partner, Dr Joe Gladstone, conducted experiments to determine how much of a hand personality has in switching behaviour. Dr Gladstone has established which psychological and behavioural factors – whether inherent or learned – determine why some people engage with their financial commitments more than others. His most interesting finding was that people who are in financial distress (or who feel that they are) will be the least likely to shop around. On the other hand, those who feel optimistic about their finances and who’re typically better off, do switch.

The result? Initiatives by regulators, the government and industry groups to encourage switching behaviour may simply be missing their target audience.

What do switchers and stickers look like?

Income

Lower earners switch the least. Middle/upper-middle earners switch the most.

EducationPersonality

People who are agreeable are considerate, generous, compassionate and trusting switch

the least. Competitive, stubborn, self-confident and aggressive people switch the most.

Childhood

Likelihood of switching was much greater in people where money had been a source of stress

for their families in childhood.

Financial nous

Know your interest rates and bank balances? You’re more likely to ditch bad

deals in favour of better ones.

Spending habits

Your typical ‘switcher’ has a higher income and isn’t

financially distressed. They’re conscientious and well-

educated, but pessimistic and disagreeable.

Your typical ‘sticker’ is financially distressed and in a lower income bracket.

They’re optimistic and highly agreeable - but nice people

could make a saving by misbehaving

The switcher The sticker

Switching is at its lowest among people with fewer years of formal education. It is at its highest among

people with a Masters degree or above.

Sprendthrifts pay more than self-confessed tightwads.

#2 Belfast

#4 Southampton

#11 Leeds

#15 Hull#10 Liverpool#3 Manchester

#5 She�eld

#13 No�ingham

#6 London

#7 Milton Keynes

#8 Norwich#9 Birmingham

#14 Plymouth#12 Brighton

#16 Bristol

#20 Cardi�

#18 Glasgow

#17 Edinburgh

#19 Oxford

Now we know what type of people they are, it’s time to discover which region of the UK is getting the most switching action…

Which regions switched the most when shopping for a savings account?* Here they are in order of most switchy to least switchy

Where are the UK’s switchiest people?

Newcastle The #1 Switchiest Place

Newcastle

Belfast

Manchester

Southampton

Sheffield

London

Milton Keynes

Norwich

Birmingham

Liverpool

Leeds

Brighton

Nottingham

Plymouth

Hull

Bristol

Edinburgh

Glasgow

Oxford

Cardiff

#1

#2

#3

#4

#5

#6

#7

#8

#9

#10

#11

#12

#13

#14

#15

#16

#17

#18

#19

#20

*a representative sample of 4,000 people.

Tell friends, family members and people you trust that you’re trying to get better at money management. This builds a supportive network, who can alert you to unnecessary spending. Set reminders. Whether you use online tools, apps, a journal or a good old wall calendar, make sure you note:

o Insurance renewal dates. Better yet, add reminders a month, a fortnight and a week before the actual renewal date. Like a snooze button for your finances.

o Energy tariff end dates. Only really applicable if you’re on a fixed-term tariff. That said, if you’re on a standard tariff get off it now! You’re almost guaranteed to be paying much more than you should be.

o Introductory end dates – when your credit card’s interest-free period expires, when broadband or satellite TV teaser deals end, when your free Netflix, Spotify or Amazon Prime trial period is up. You get the idea.

o Your fixed-term mortgage end date. This is a biggie. Remortgaging savings can be HUGE. But arranging a switch takes time, so get started around three months ahead of the expiry date of your current deal.

Know your personality traits – and learn from them. GoCompare has created a quiz to help you identify your financial personality type: www.GoCompare.com/BeatTheBills. Once you know your weaknesses, you’ll understand what could help you take better control of your bills.

Don’t let bills get on top of you. Engaging with your finances is the key to saving money and not being over-charged. Look through the letters carefully - ignoring bills means leaving money on the table!

Our research conclusively proves that nice people finish broke, but leopards can change their financial spots and it pays to nurture a mean streak – so here’s Dr Gladstone’s action plan:

www.GoCompare.com/BeatTheBills