The field of behavioral finance can be put to practical use in getting defined contribution plan participants more engaged in and educated on their retirement plans, said Warren Cormier, CEO of the National Association of Retirement Plan Participants and CEO of Boston Research Technologies, at Pensions & Investments' Global Future of Retirement conference in New York.
During his keynote speech at the conference on Tuesday, Mr. Cormier cited a simple redesign of a typical enrollment form for a large employer's defined contribution plan as an example where behavioral finance can be put to practical use and increase participant engagement.
By making simple tweaks to the typical DC plan enrollment form design, such as removing generic pictures of people sailing or playing tennis common in these forms, adding more white space and eliminating jargon can increase trust and engagement among participants, he said.
"A lack of white space deteriorates trust," he said, adding that pictures of people within a standard DC enrollment form are "generally distracting."
Mr. Cormier also noted that replacing jargon with "a more conversational tone" and to provide "brief relevant details" instead of excessive details tends to make the plan participant trust the material more, which in turn increases plan participation.
"Trust allows people to take risks, to engage and to change behaviors that may not feel natural or intuitive," he said.