If it is true the fear of loss motivates people more than the offer of a gain, then the traditional 401k company match framework is designed improperly. Currently, employees are promised a reward for contributing in their 401k plan. Think of this as the carrot urging people to save for their retirement. What if, instead of using a carrot, plan sponsors reframe the “match” in terms of a stick?
Tag "Margaret J. King"
![What Bagels, Loss Aversion, and Reframing the Company Match Can Show the 401k Fiduciary About How to Help Employees Save More Money for Retirement](https://fiduciarynews.com/wp-content/uploads/2018/02/bagels-1318284-660x395-505x306_c.jpg)
![How Anchoring Hurts 401k Retirement Savers](https://fiduciarynews.com/wp-content/uploads/2017/12/one-walk-down-the-kyrenia-harbour-1419542-660x395-505x306_c.jpg)
With the introduction of the concept of anchoring, Tversky and Kahneman opened the door to a new way of thinking about and addressing the financial decision-making process. For more than four decades, subsequent research has expanded upon their idea. Yet, plan sponsors and participants continue to remain uninformed of the dangers of anchoring.