PSNC 2013: Participant Behavior and What It Means to Maximize It

June 6, 2013 ( – Engaging employees in their retirement plans involves simplicity, connection and accurate diagnosis.

Plan sponsors must keep their retirement plan information simple while also making it personal; they must realize that money is connected to emotions and use behavioral finance accordingly; and they must accurately diagnose what employees must do to progress in their retirement planning, said Carol Waddell, head of product and marketing at J.P. Morgan Retirement Plan Services, during the 2013 PLANSPONSOR National Conference panel “Participant Behavior and What It Means to Maximize It.” 

Engagement is not just defined as how much attention employees pay to their retirement plans but also as how much their attention leads to action, she said. J.P. Morgan found that, in its book of business, 38% of participants were disengaged; 10% were passive, meaning they rely on the employer to make automatic transactions on their behalf; 30% were interested; and 22% were active.

The first communication tactic that retirement plan professionals can use to increase participant outcomes is simplicity. Even the simplest experiences must be well-packaged in order to be effective, Waddell said. She cited retirement income projections as one example—J.P. Morgan puts participants’ retirement income replacement number front and center on their online accounts.

The company’s call center also mentions that number to participants during every conversation, and the number is embedded in every communication participants receive concerning their retirement accounts. “The more consistently people see this number, the more likely it is to drive action,” Waddell said.

The second communication tactic is connecting emotions to money—behavioral finance can be used to influence participant outcomes, Waddell said.


She mentioned several behavioral-finance schools of thought that plan sponsors should keep in mind, including social norms—the “everyone is doing it” mindset. J.P. Morgan uses social norms on its website by showing participants how their peers are saving for retirement. The “people like you” profiles demonstrate how the participant deviates from the norm and how he can change his behavior.

Waddell also mentioned the idea of placement, which, she explained, is how the presentation of choices affects selection. Research indicates that voters tend to pick the first choice on their ballots, so, likewise, things such as savings rates can be affected by the order in which they appear. For example, an enrollment card could first give the choice of an 8% contribution rate, followed by 6% and 4%. “So placement and the number of choices become critical,” Waddell said.

Diagnosis is the third communication tactic. The retirement industry must use more sophisticated, personalized metrics to understand individuals’ retirement behaviors and needs. On top of that, more targeted strategies must be used to enhance the data. “The messages we use really need to vary dramatically for these audiences,” she said.

Waddell closed the conference session by commenting on the future of engaging participants. Going forward, games will be a big engagement tool. When J.P. Morgan launched its first game, it saw a “dramatic” spike in website usage, she said.