Blog
June 20, 2018
Digital Nudging
In a recent paper authored by behavioral economist Shlomo Benartzi, he looked at the impact of an email to get employees enrolled in their employer’s retirement plan.
He did a study in conjunction with the White House Social and Behavioral Science Team, also known as the Nudge Unit, a name left over from the Obama administration.
Their findings were that a well drafted email nearly doubled the program enrollment rate compared to the control group.
The email used simple nudges, such as providing actionable steps for enrolling in the savings program and giving people clear examples of how small contributions can lead to large account balances.
BEI has the perfect tool for the nudge. It is called the Paycheck Comparison Report. It shows employees how important it is to save now, how their pay check is affected and projects how much money they will have at retirement.
http://www.benefitequity.com/resources/paycheck-comparison-report
With this report and an email link to the online website of your record-keeper, you have created actionable steps for your employees. Also be sure to include your financial advisor in on your desire to increase enrollment. They are available to help get questions answered.
What is the future of digital nudging?
Shlomo Bernartzi is also the Senior Academic Advisor for the Voya Behavioral Finance Institute for Innovation. They are engaging in a project using “Big Data” to assess whether a person is making financial decisions using their fast instincts or carefully reflecting on the alternatives.
So far it appears that people who spend more time on the enrollment website save more money. From this study, knowing how a person makes their decisions can help tailor the nudges accordingly.
Your 401(k) record-keeper has great tools to help with enrollment, we just have to get employees to use them.
For assistance with our tools, get in touch with us today at 1-800-899-9141 or planservices@benefitequity.com.
Author: Robert Gorelick, APA, Founder Benefit Equity Inc.
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