As many plan participants make today’s investment choices on a screen rather than on paper, app and website design have taken on greater importance in influencing their behaviors.
A number of studies shows that small changes in page layouts can produce significantly divergent behaviors. According to a paper by Shlomo Benartzi, UCLA professor and senior academic advisor at the Voya Behavioral Finance Institute, “The evidence… suggests that even minor changes to the online experience of participants — such as increasing the number of lines on a website, or changing the frequency of account feedback—can have a large and lasting impact on their financial success.”
The shift to digital interactions has implications for fiduciary duties. It is highly appropriate and even necessary to consider the digital design of a provider’s electronic portals in light of how it can help support a plan’s goals and character.
In order to improve the digital design process and its outcomes, it is therefore prudent to establish a digital policy statement. Most seriously-managed plans have an investment policy statement; the digital policy equivalent would spell out a plan’s digital design objectives, the process for measuring effective design and portal management and improving them.
The dawning of digital design as a fiduciary concern has created a business opportunity for consultants beyond the investment and other educational expertise they are expected to contribute. Many smaller plans will need to acquire expertise and identify providers to tailor a portal’s design to the plan’s goals.
For more information, please read:
Rethinking the Fiduciary Role for a Digital World | Wealth Management