Workforce & Economics

Communicating trust =
Saving more

May 3, 2016
By Laurie Rowley

At the beginning of 2015, my organization—the National Association of Retirement Plan Participants (NARPP)—worked with a State Plan Sponsor to dramatically improve the retirement savings outcomes for their 175,000 employees. To accomplish this, NARPP challenged long-standing industry beliefs about the ineffectiveness of communication to educate participants and motivate their retirement savings decisions.

By redefining the State Plan Sponsor’s communication materials with a scientifically-proven, people-centric design strategy, we effected a 25% increase in voluntary enrollment in the Sponsor’s 457 plan, as well as a 600% increase in the use of SMarT (for “Save More Tomorrow,” the state’s automatic contribution increase option—all in a period of four months.

These results can not only be replicated, but improved upon. All we need to do is radically reimagine communications as an opportunity to cultivate empathy and build trust.

Communication that builds trust. NARPP, a 501(c)(3), is an independent advocate for American retirement savers, focused entirely on developing participant-centric solutions. Through innovative industry research and design that employs strategies from behavioral finance, NARPP is presenting new ways to address old problems. We are motivated by the belief that people want to make the best retirement savings decisions for themselves and their families; and we are committed to helping them make these decisions by helping make it easier to save for retirement.

What we've found through our research is that trust is the missing ingredient (a mere 1 in 4 today trust their current record keeper).1 And we know that communication—when it's done right—is the key to building trust and ultimately driving participant engagement.

Though we are a relatively young organization, our conviction at NARPP about the importance of communication in driving participant engagement is deeply held and comes from a long collective tenure in the industry. Despite the retirement industry’s desire to increase participant engagement, communications have been deemed ineffective. As, indeed, they have hitherto been, because information is often presented in a way that is overwhelming, dense, and not intuitive. Instead of motivating behavior, traditional communication strategies have often induced fear, anxiety and disengagement.

Though automation has been heralded as a way to bypass education and increase savings rates, in some ways automation has further compounded participants’ lack of engagement and made them more passive when it comes to making beneficial savings decisions. Our work at NARPP has demonstrated that to fully realize the benefits of automation, effective behavior changing communications need to be applied in tandem.

Putting people-centered design to the test

Employers want their people to succeed. Mirroring our belief that participants want to make better decisions, we also believe that employers want this for their workers, too. This became clear when we put out a call to Plan Sponsors asking if we could re-engineer their education and communication materials for participants: the response was overwhelmingly enthusiastic. Without question, employers care about providing the best possible retirement savings options for their employees. They just need the right communication tools to educate and motivate.

NARPP's process is rigorous and intuitive

We decided to deploy our unique design strategy with a large State employer who was looking to increase voluntary enrollment in their 457 plan, and increase participation in SMarT. The State’s plan is offered as a supplemental retirement plan to all 175,000 employees, enrollment is voluntary, with no employer match and communication materials are paper-based. Our task was to design a single, 8.5 x 11 inch, piece of communication—the enrollment form.

First, we reviewed the existing materials to gather information about core messages and to catalogue the data that would need to be included on the new form. We then applied our proprietary communications design strategy, Intuitive Sustained Engagement (ISE) to redesign the essential enrollment information. Our methodology transforms complex and confusing information into relevant, accessible, and engaging content, in the following ways:

  1. Eliminating confusing charts and industry jargon
  2. Minimizing the number of required decisions in each piece of communication
  3. Highlighting the consequences of optimal and sub-optimal decisions
  4. Using step-wise learning to build confidence in decision making

The new form was phased in on January 1, 2015 (with a time lag incurred to eliminate the old form given paper is being used).

What we've learned: Speak human

The retirement savings industry will not be able to help improve outcomes without radically changing its communications, which are critical for empowering better decision-making. It’s in how we speak to people that we have the ability to instill trust and inspire action. To this end, NARPP has continued to design communications that speak directly to people in clear, jargon-free language that communicates empathy, inspires confidence, builds trust, and drives engagement.

Our research and design have revealed insights that can serve as guideposts for the entire industry:

  1. People want to engage and make good choices for their future – they just don’t know what those choices are.
  2. Everything starts with winning the trust of the individual, and trust arises from basic intuitive feelings about the reliability of another person or entity.
  3. Trust is won or lost during the process of communication (regardless of the medium). To engender trust, communication needs to be concise and simple.
  4. Effective information relies on interdisciplinary strategies from behavioral finance, communications theory, and human-centered design.
  5. The medium used does not lessen the burden of creating excellent, trust inspiring information, i.e. messaging and social media channels are not in themselves enough to mitigate the effects of bad communications.
  6. Similarly, auto-features are a tool in the toolbox, but not a complete solution.
  7. With the right communications in place, large-scale behavior change is possible.
Author: Laurie Rowley

About the author

Laurie Rowley
Co-Founder. President, NARPP

Laurie is a passionate advocate who is at the nexus of initiatives to increase financial literacy, make information transparent and accessible and improve outcomes for the millions of Americans saving for retirement. Laurie is a performance driven leader and entrepreneur known for successfully executing an organizations vision and overcoming challenges. Laurie has over 25 years of experience in financial services. Over her career she started several research firms including helping launch the Behavioral Finance Forum. Her expertize is in financial decision-making, research, operations and managing large scale, high impact projects.