Translating Motivation to Action: The True Challenge of Financial Wellness Initiatives

I’ll never forget my very first iPod: the Shuffle. I received it as a gift, and when I first tried to use it, I was perplexed. Where was the screen?  Where were all the buttons? How was I supposed to find the songs I wanted to listen to? How did you plug it in?

The iPod Shuffle’s elegant and minimalist design is now iconic. But the lesson from the creation of the iPod is even more impressive: Its designers had hit upon an amazing recipe to make customers embrace a product they didn’t know they wanted by effectively tapping into their psyche.

For employers offering financial wellness initiatives, such a recipe apparently remains elusive: despite a proliferation of such programs, the path to their adoption by workers is still a bit rocky. At least, that’s the message from a recent virtual American Savings Education Council (ASEC) meeting held by the Employee Benefit Research Institute (EBRI). The conversation started when EBRI Senior Research Associate Craig Copeland unveiled the results of EBRI’s 2020 Employer Financial Wellbeing Survey. According to the survey, which was fielded in July of this year, more than half of the employers currently offer financial wellness initiatives, with companies reporting currently offering an average of 4.9 benefits. Companies also said they were spending more money on financial wellness initiatives than in prior years: In 2020, 44 percent of companies said they spent more than $50 per employee annually. This was 33 percent in 2019.

However, employees aren’t necessarily getting the message about their employers’ commitment to workplace financial wellness. EBRI’s Director of the Health Research and Education Program Paul Fronstin showed that, in a Workplace Wellness Survey fielded in the very same timeframe, 7 in 10 employees agreed that they need their employer’s help in ensuring they are financially secure, and just over 6 in 10 said it is their employer’s responsibility to do so. However, only 4 in 10 employees rated their employer’s efforts to improve their financial well-being as very good or excellent.

Elizabeth Perry, Social Scientist with the Federal Thrift Retirement Board, suggested that the disconnect between how much effort employers are putting into workplace financial wellness and employees’ faint praise could be explained by cognitive overload. Original research on cognitive overload established that people can typically only hold seven thoughts in their head at any time. New thinking on this topic, Perry says, suggests it might actually be closer to four today. With so many benefits to choose from, in other words, people might simply be overwhelmed.

Creating a clear path between workers’ financial wellness needs, their desire for help, and the solutions available can help greatly. Perry demonstrated the importance of making it easy for people to take action on their intentions by citing a study that examined factors that drove students to get recommended tetanus shots.

According to the study, simply motivating students to get their recommended shots by explaining the nightmarish effects of tetanus was not enough. Showing photographs of bedridden patients motivated students and made them fearful. However, few got the shots until such photographs were combined with specific steps that needed to be taken. These included where to go to get the shot, the times the health center was open to provide the shot, and even how getting the shot could fit into students’ school schedule. In fact, 10 times as many students actually got a tetanus shot when the action steps were included vs. when they were left out.

For the Thrift Savings Plan, Perry replicated the approach to increase savings rates by combining motivating messages such as “You’re Missing Out On Free Money” with a specific plan of action for participants concerning what they needed to do to increase plan contributions. Perry found that three months after the communication, savings increased for approximately a quarter of people receiving the communication.

Gary Mottola of FINRA echoed Perry’s observations at the ASEC meeting, noting that “the thing that makes the most difference is — is it easy to do … People can get lost, run out time.  The easier you can make it, that is great … It is tempting to overestimate how intuitive things are.  We’ll tell them just to go here and they can figure it out. A lot of times these systems are not intuitive.” 

This concept was central to the U.S. Financial Literacy and Education Commission’s (F­LEC) recently released “U.S. National Strategy for Financial Literacy, 2020.” In this report, the Treasury identified eight best practices for effective financial literacy and education programs. I’d like to highlight four of them that relate most specifically to our discussion at the ASEC meeting:

  1. Know the individuals and families to be served.
  2. Build on motivation.
  3. Make it easy to make good decisions and follow through.
  4. Evaluate for impact.

Often, as we saw with the tetanus example, a lot of effort goes into Best Practice Two — building motivation to take action — without factoring in Best Practice Three: the need to make that motivation actionable. This is done, according to the FLEC’s report, by “removing hassles and barriers, and adding supports [that] can help people bridge the gap between their intentions and what they actually do.” The FLEC report further notes that the best practice of making it easy to follow through “highlights that programs can be designed to make it easier for people to get financial education, for example, by integrating financial education into programs and places where people already are, like their job or a higher education institution.” In other words, success in behavior change relies not just on making sound financial wellness programs available but on integrating these programs effectively into individuals’ day-to-day environment.  In the tetanus shot experiment, a map was presented to the students of the campus with the university health building clearly circled. Also, a request was made that each student review their weekly schedule to locate a time when they would pass by the university health building so that they could stop in to be inoculated. Yes, evidently, this is level of detail needed in successful action plans for financial wellness initiatives.

And clearly, this level of detail around action steps can only be accomplished by knowing those being served: in other words, the FLEC’s Best Practice Number One. Simply put, if employers aren’t familiar with action steps that will resonate with their employees, they cannot provide employees with a valid plan that will translate motivations around financial wellness into action.

With this in mind, EBRI will be devoting both our 2021 Retirement Confidence Survey and our 2021 Workplace Wellness Survey to understanding the unique retirement, financial wellness, and health benefits considerations of African-American and Hispanic workers, along with their White counterparts. This is the type of knowledge that can help employers, providers, and policymakers better understand how to tailor solutions — and delivery — to these individuals and their families.

Finally, with respect to Best Practice Number Four — evaluating for impact — 2021 will also see the release of EBRI’s inaugural research that will measure the impact of financial wellness initiatives on workers’ retirement savings. By combining the EBRI/ICI 401(k) Database with EBRI’s financial wellness and consumer databases, we’ll be able to understand which financial wellness approaches — both the initiatives and their delivery — move the needle when it comes to improving retirement savings outcomes. That brings me back to the iPod Shuffle. The product was successful because it understood its consumers — perhaps better than they understood themselves. If you’d asked me if I cared about playing certain songs at certain times before the Shuffle, I probably would have said “yes.” But the reality is, I — and millions of consumers — actually preferred an elegant, inexpensive solution more. We were willing to adopt a surprising new product as a result.

About ebriorg
President and CEO, EBRI

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