401(k) Plan Education by Way of Gamification

While at a recent 401(k) industry conference, I had the pleasure of attending Gabe Zichermann’s session on gamification. While I am familiar with the concept of gamification, I was intrigued by the direction the session took. Mr. Zichermann was very successful in ensuring his keynote speech was highly relevant to the retirement planning industry and did a great job in introducing gamification as a tool that can help make retirement investing approachable and even fun to the general population.

Listed below are the basic hypothesis:

  1. Everyone in the audience (RIAs, Retirement Professionals) is used to approaching spending differently than the rest of the general population. In this industry, we are in the habit of deferring pleasure-spending today for more pleasure-spending tomorrow. This is NOT the norm. Most people are subject to Hyperbolic Discounting which means they value spending now much more heavily than they should.
  2. As retirement professionals, it is our responsibility to educate people on the importance of deferring unnecessary spending. This is an uphill battle as the ENTIRE rest of the economy is in the business of convincing people to spend NOW.
  3. A lot of retirement education/communication tends to have the negative, underlying message YBlog GraphicOU HAVE FAILED (can anyone say “gap analysis”). By associating retirement saving with shortcomings and sacrifice, we are ratcheting up the pain and driving people away.
  4. The idea of “gaming” should not be dismissed as something that appeals only to young men. Playing games and having fun matters to all demographics and drives behavior across the population.

 

If we accept these four hypotheses as true, then how can we change our plan communications?

  1. Understanding the logic behind saving for retirement, isn’t necessarily enough to make it appealing to most people. We need a way to customize communications to target the general population.
  2. Our target audience are also consumers. That means, we are competing for $$ with retail giants such as Amazon, Starbucks, Walmart, Apple and Netflix. This sets the bar high for us. Our message will be stronger if it is positive, focused, targeted, actionable and delivered via the right channel. 12-page glossy brochures are not getting it done.
  3. How can we use gamification to shift our message from fear-based to opportunity-based? Can we develop gamification techniques that will enable people to quickly iterate on plan participation options and to discover what works for them? We need to provide easy to use, high information, low cost ways for individuals to discover their own best retirement options.
  4. We can assume that not everyone (likely less than 10%) enjoys learning about finance, but that everyone does enjoy playing games – how do we incorporate this into our communication and education toolset?

 

Of course, plan design matters quite a bit; some designs will naturally yield better retirement outcomes than others. However, education plays a big role as well. If we can change both the messaging and the method, we can make an impact on the population’s openness to learning more about saving for retirement.