Voya nudges employees to save more on retirement
Astute goal-setting and strategic website design can go a long way toward encouraging retirement savers, Voya Financial researchers have found.
Back in 2016, the New York-based insurance company launched its Behavioral Finance Institute for Innovation in order to understand how Americans make financial decisions and discover how to maximize their retirement savings.
Marc Wiznia, Voya’s head of enterprise strategy & business development, shared key findings from the innovation team's research in a session at the SourceMedia In|Vest conference.
“There are hurdles, behavioral roadblocks, for people to engage with their personal finances. That’s what we’re trying to overcome,” said Wiznia.
In their consumer survey on retirement planning behavior, Voya found that more than twice as many people update their social media profiles each year than review or adjust their retirement plan — and that the millennial demographic was nearly four times more likely to do so.
Voya's testing included simulations on whether a suggested savings allocation toward retirement shown on a website display would impact the amount people chose to save, randomly selecting a percentage from 6% to 11%.
The results showed that the higher the percentage shown on the website, the higher the percentage of participants would commit to saving.
But that’s only up to a point — the closer to 11% the savings goal on the screen inched, the more people backed out, intimidated by the amount they had to save.
“They said, ‘wow, if I have to save a lot, then I don’t want to save anything,’” said Wiznia.
Based on those results, Voya settled on a seven percent target display rate, and the company provides that research to employers thinking about where to set their own rate. “Having an automatic rate at 1% is the biggest flaw employers make when helping employees save for retirement, Wiznia said. It puts employees who are signing up in a bad position, he added.
Voya’s innovation team went on to look at how digital design impacts consumer behavior. They changed three parts of their site: moving important information closer to the decision-making point, simplifying language and using traffic-light colors to let employees signal their preference to save by themselves, with help, or not at all.
By implementing these changes, they found the average savings rate increased by more than 10% and the number of people getting a full company match rose by 20%.
Voya will be scaling its retirement planning services digitally, Wiznia explained, as a growing amount of consumers don’t want to interact with people.
“Our innovation program and how we think about behavioral science research is really focused on this middle layer of connecting ideas to the businesses that have a strong legacy of being able to virtualize new things,” he said.