According to the announcement, the video programs resulted in a 56.2%-increase in those electing to join a retirement savings program within 30 days of viewing the communication programs compared to similar decisions among target employees who did not see the four program videos during the study period (January to June 2008). These differences were sustained after 60 and 90 days.
The study focused on women and lower-income employees because of disproportionately lower financial literacy levels and lower retirement savings participation rates. “We are particularly interested in women and low-income employees because these groups face unique savings challenges,” Lusardi said in the news release. “Women, for example, live longer than men and they are normally the caretakers for children or aging parents. To take care of their families, they first have to take care of themselves.”
Lusardi and Keller said they tested the effectiveness of the educational effort by surveying Dartmouth workers before and after being exposed to a printed flyer distributed in a new employee benefits package and the program videos, including one shown during new employee orientation.
Based on the surveys and in addition to the participation gains, the researchers claimed their program was successful in reducing employee anxiety about being able to meet future retirement needs.
They also said the program increased awareness of the importance of financial knowledge, including a heightened interest in professional advice. “In particular, we demonstrate our communication programs increased the importance of thinking about the future, the need for personal control over retirement saving, perceived manageability of the future, and the importance of job stability,” the researchers wrote.
“[Our research subjects] know what they want to accomplish with savings. However, there is a gulf between what people aim for and their perceived ability to get there,” Lusardi said. “We hear over and over that people feel they are not sophisticated investors and that they do not know where to start. People are very different and those differences should be taken into account when devising saving initiatives.”
Tips for Plan Sponsors
For older employees closer to retirement, the study recommended employers consider asset allocation/asset management seminars “where they could see if their money is in the right place.” Employers should also give some thought to bringing in financial advisers “who can strategize with (employees) and work hand in hand with them until their retirement.”
A key talking point to deliver to younger employees, according to the study, would be the virtues of saving “in order to make it top priority.” Employers could consider training small groups among their target audience and using them to help orient their peers. “Financially knowledgeable people in this group could be used to display benefits of long term planning and tools used for it,” the researchers said.