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Dear Reader, On May 10 we held our annual BeFi conference in Washington D.C. The speakers and discussants presented a number of exciting new findings. A special keynote was presented by Tim Shakesby of the European Commission on the EU approach to regulation of financial markets in Europe. This newsletter gives you a flavor of some of the presentations and the discussions. In the next newsletter, more findings will be discussed. The presentations have been recorded and they should be available on our website (www.befi-forum.org) soon. We will send you an email when they are available. Enjoy reading! Arie Kapteyn Does Financial Advice Help or Harm Consumers?
Consumers certainly seem to need help choosing the most appropriate financial products. But are financial advisors, as they now operate, the answer? Advisor and client interests are not perfectly aligned. As Santosh Anagol of The Wharton School described, financial advisors can recommend products that are best for their clients, products that earn the highest commission, or some permutation of the two. And when clients favor suboptimal strategies due to behavioral biases, advisors can either try to correct these mistakes or instead cater to preexisting biases. Subtle Policies Can Pack More Punch
One of the ways assets "leak" out of 401(k) and similar types of defined contribution pension plans is through loans that are taken out on these plans but not repaid. Analysis suggests that a less drastic policy approach to reducing retirement plan leakage could be more beneficial than hard-line policies. In addition, making it easier to implement savings-enhancing decisions could increase retirement assets. Several recommendations apply these strategies to address retirement plan leakage. Designing Communications to Increase Saving
Saving for the future often requires taking on more immediate burdens for the sake of longer-term benefits. Small changes in the design of communications can influence people's patience for future benefits. This could have important implications for efforts to increase saving as well as for marketing of financial and other products. |
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