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Cracking the BeFi Code

As 401(k) plans increase their reliance on auto plan design features, we are seeing participants’ engagement and savings rates declining on average. The tactics many thought were going to boost retirement readiness appear to be having unintended consequences.

As a result, plan advisors and their plan sponsor clients alike are seeking proven techniques that that break through to participants and change behavior. Advisors who are able to do this will see improved outcomes and higher levels of trust and loyalty from both sponsors and participants.

Behavioral finance pioneer Warren Cormier thinks he’s found the solution: a new approach to participant education he calls “Intuitive Sustained Engagement,” or ISE.

In the latest issue of NAPA Net the Magazine, Cormier explains the five basic elements of ISE:


  • It is visually disruptive. When plan sponsors see it for the first time, he says, they are struck by the fact it doesn’t look like anything they have ever seen from the DC industry.

  • There is very little text on each page — only enough to bring the participant’s level of knowledge from where it is (usually low) to where it needs to be to make a decision (also typically low).

  • It does not use visuals that cause participants to think, “there’s nothing new here, I guess I can move on to something else.” Bar charts, pie charts and histograms — the visual-of-choice for DC employee education programs — only remind participants of something from their past they don’t ever want to revisit, Cormier asserts: statistics and economics courses from high school and/or college.

  • It pulls the reader through a series of simple consecutive and connected messages that allow the participant to visualize a desired state and how it can be achieved. It also shows the clear path to transforming a decision into an action.

  • It employs a consequence-based choice architecture called “enhanced active choice” in which each choice is associated with a possible consequence. “Interestingly, the plan sponsors we have been working with feel they want to state the consequences of their decision as strongly as possible while still passing compliance,” Cormier notes. “That is, they feel that their participants do not understand the impact their decisions have on their lives.”


Some of the strongest interest in the ISE approach, Cormier reports, has come from the advisor channel.

In addition to Cormier’s regular “Inside the Plan Participant’s Mind” column, the Winter 2015 issue of NAPA Net the Magazine includes the cover story on making the ROI connection between the bottom line and employee well being, as well as feature articles on robo-advisors’ entry into the 401(k) market and preparing for the SEC’s coming money market reforms. The issue also features insights from regular contributors Jerry Bramlett, Steff Chalk, Nevin Adams, David Levine, Brian Graff, Don Trone, Joseph DeNoyior, Jania Stout, Fred Barstein and Lisa Greenwald Schneider.

To view Cormier’s column, click here and select “The Shrinking Dependence on Participant Education.” And to view a pdf of the full 52-page issue, click here.

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