By Patty Kujawa
Apr. 23, 2015
Plan sponsors who are serious about changing worker behavior toward their 401(k) plans might consider injecting a little fun into their retirement programs.
And experts agree: Concepts like gamification are way overdue in the 401(k) industry. Surveys show workers are worried about their retirement, and plan sponsors know it. Only 12 percent of 457 plan sponsors said their employees know how much to save for retirement, a November 2014 survey from consulting firm Towers Watson reported. Only 20 percent said their workforce is comfortable making investment decisions.
The same survey said employers are ready to change. While only 8 percent of plan sponsors surveyed said they use gamification strategies, 78 percent said they plan to increase their use of technology to deliver information over the next several years. The idea isn’t new, but its application in the digital world is exploding with leaders like Fitbit, which uses badge rewards and online interaction with other users to get people moving and living healthier lives.
“It’s just not that interesting going to a seminar or reading a pamphlet,” said Nick Maynard, senior innovation director at nonprofit Doorways To Dreams Fund. “Games have a significant ability to affect participants relative to other traditional means of communications.”
Increasing the use of technology may not exactly mean hitting the play button, but it does send things in a more positive direction.
“Gamification is more in its infancy stage,” in terms of 401(k) development, said Heather Tredup, associate partner at consulting firm Aon Hewitt. “The question now is how do we take what we see working and apply it across the benefits community.”
Fidelity Investments introduced its Netbenefits mobile app last year. Similar to leaderboards on many online games, participants can compare their 401(k) account balances and contribution levels with other anonymous Fidelity participants of the same age. They can also filter data by ZIP code, state, region or national statistics, as well as see how they’re doing compared with other age groups.
It’s not a game, but Netbenefits uses gamification strategies to get users to pay attention to what they are doing — or not doing.
Fidelity reported participants checking out their peer’s contribution rates were 17 percent more likely to make a change compared to overall Netbenefits users.
“The 401(k) world has a very challenging, motivational framework, because most people don’t have an emotional attachment with helping their future self,” said Charles Berman, Fidelity’s senior vice president for digital platforms. With Netbenefits, “we’re getting them to pay more attention and to make simple, but important decisions.”
Maynard’s Doorways To Dreams Fund created Bite Club, an online game where users become the owner/manager at a bar for vampires. Players whisk guests in, get them to a table, couch or dance floor, and serve drinks. Then after each round, players figure out how to spend the money they earn by paying down debt, investing in retirement and savings, or buying items to improve the club.
Office supply company Staples had Bite Club tailored to its workforce to help employees learn how to save for retirement and manage other financial decisions. After work, employees can play Bite Club and then go straight to their real 401(k) accounts to make decisions.
Maynard said that since 2013, Staples employees have played Bite Club 15,000 times, which he translates to 900 hours of financial education.
“It would be hard to deliver that many hours of education across so many stores,” Maynard said. “They’re playing this game, and it gives them confidence to make decisions.”
Even with the surge in turnkey features like automatic enrollment and annual programmed increases in contributions, workers who don’t understand what they’re doing with their 401(k) can easily undo its progress, said Gabe Zichermann, gamification author and co-founder of New York-based consulting group Dopamine.
For example, participants short on cash might see 401(k) savings as a personal bank unless they truly understand the intent of the account, Zichermann said. Playing games that teach financial planning can help people learn from their right and wrong moves in the fantasy world so they can make solid, reality-based decisions.
“Until people become active and engaged drivers of their financial future, and they really understand why they make certain decisions, they can easily undo what auto features help them achieve,” Zichermann said.
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