PLANADVISER - November/December 2017 - 44

Shlomo Benartzi, professor,
UCLA Anderson School of
Management, and senior
academic advisor at the
Voya Behavioral Finance
Institute for Innovation.
potential to markedly improve plan
participants' retirement outcomes.
He reflected on the campaign
that detailed in his book " Save More
Tomorrow. " Basically, he said, people
want to save but will say they have no
money to do that today. The campaign
asked employees to save more later-
specifically, when they get an annual
pay raise. At that time, they will start
receiving more, but if that money goes
right into savings, they will not miss
it.
" People forget, " he said.
" So the
campaign's idea was to combat inertia
with automatic savings. "
According to Benartzi, it took him
there is a skilled plan adviser in place,
we very reliably see participation levels
go up, contribution rates go up and
annual returns go up, " he said. " And
so, we know the role of advisers in the
business has been greatly successful,
and we need to continue this. "
He also repeatedly urged advisers
to keep in constant contact with their
elected representatives and to stress to
them the importance of protecting taxadvantaged
retirement investing.
Audience Poll
Has your business faced any measure of fee
compression in recent years?
l Yes, we have experienced mild to moderate fee
compression that is manageable 51.8%
l No, pricing for services has remained stable
for some time 21.4%
l Yes, we have experienced significant fee
compression that is manageable 19.6%
l Yes, we have experienced dramatic fee
compression that threatens our model 7.1%
Behavioral Finance and
The Future of Improving
Retirement Outcomes
Shlomo Benartzi, business school
professor at the University of California,
Los Angeles (UCLA) Anderson
School of Management, and senior
academic adviser at the Voya Behavioral
Finance Institute for Innovation,
said that behavioral economics has the
two years to locate a plan sponsor
willing to try out the concept, and
the results were convincing. Average
participant savings with the " Save
More Tomorrow " campaign at that
employer went from 3.5% in 1998 to
13.6%% in 2002. The plan sponsor,
along with its adviser, asked the
lowest savers to increase their contribution
by 3% each year up to 12%, and
80% of them signed up. Benartzi said
almost all who did so remained in the
retirement program, though nearly
20% stopped at 9.4%. However, not one
participant dropped back to a lower
saving rate, and those who continued
in the program and retired did so
having four times as much retirement
income.
" The right behavioral insights,
placed with automated solutions to
make things easy, worked, " Benartzi
observed.
He said it took about 20 years for
the ideas from " Save More Tomorrow "
to fully catch on-the industry needs
greater speed and scale to get more
savers to their retirement income
goals. He said technology is the tool.
A study by the University of Colorado
with people who received 24
hours of financial education found
general education did not work, but
" just-in-time " education did. Benartzi
explained that new savers do not need
education about missing compounding
interest opportunities if they cash out
their savings at a job change-they
will forget that information. However,
people shown the financial dimensions
of their lives-how much they make
44 | planadviser.com november-december 2017
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PLANADVISER - November/December 2017

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