Tools such as its “Boost Your Savings” dial and Retirement Analysis Alerts are delivered to participants based on their savings rate, investment mix, other retirement readiness indicators and plan features.
The “Boost Your Savings” dial is a speedometer-like gauge that displays a participant’s current savings rate and recommends a range of increases. Users can turn the dial to the number they want and in one click, submit a request to change their regular contribution amount. In a test of the dial, Vanguard recommended a 1%, 2% or 3% increase. Participants who used the dial between its rollout in December 2012 and this May increased their savings rate by an average of 2%.
The Retirement Analysis Alerts are delivered in the form of a stoplight to encourage participants to use either of two investment advice services if offered within their plan. One is Personal Online Advisor (POA), which provides a personalized forecast and fund recommendations from Financial Engines. The other is the Vanguard Managed Account Program (VMAP), powered by Financial Engines, which creates, implements and monitors a custom plan for a reasonable fee. Year-to-date through May, nearly one-quarter of the participants who received these alerts clicked on them. Of those who responded, 12% adopted POA and 6% chose to enroll in VMAP.
“Tools like these can be a remarkably successful way to nudge people into making better decisions by putting healthy choices front and center and giving them a way to quickly choose with basic, compelling and easy-to-use graphical images,” said Amy Cribbs, head of Vanguard’s Participant Experience. “They can make a blunt choice without having to read a lot, think a lot and do a lot of math like they may have to do with traditional online calculators. These new tools lead to direct action instead of general contemplation of your financial situation, which can be so overwhelming to some people that they may instead not do anything at all.”
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