Finding ways to leverage the engagement of plan members in order to optimize their experiences, decision-making and outcomes was a recurring theme at Benefits Canada’s Defined Contribution Plan Summit this February.
One way to boost outcomes is by considering the growing science of financial attention, according to Jane Henshaw, head of digital research at the Vanguard Group Inc.’s Centre for Investor Research.
Read: DC Plan Summit: A look at the attitudes of DC members around the world
Henshaw described financial attention as “notice taken of information about one’s financial affairs, particularly when in digital form.” The degree to which people regard such information as interesting or important also matters. For example, members may consult their accounts on a fairly regular basis but take action only once per year. Those facts matter, as there are increasing questions about the degree to which financial attention is shaping investor behaviour, choice and patience, Henshaw noted.
Research into financial attention has implications for several areas, including communications, digital design, savings and spending behaviour. For example, use of mobile or traditional web technologies may have differing effects on portfolio allocation. “Deep psychological phenomena govern our consumption of digital data,” said Henshaw, who has overseen the implementation and evaluation of several digital enrolment and savings techniques.
“We are only beginning to understand how behaviour and information interact.”
Read: Balancing a human and digital approach to plan member experiences
Financial attention varies markedly among different groups, said Henshaw. For example, defined contribution and retail investors have different areas of focus, with the latter group more sensitized to daily fluctuations. The size of one’s portfolio also affects financial attention, as does gender. Men, for example, tend to spend more time studying their portfolios than women.
With those issues in mind, financial institutions should emulate the efforts of companies such as Facebook Inc. and Amazon.com Inc. in routinely studying the attention customers pay to their websites, said Henshaw. “The importance of digital environments is only expected to grow, even for institutions and client groups where traditional methods of communication have dominated.”
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