Investment Mentoring: Beyond Gamification in Behavior Change for Investors

Recently, the financial services industry tapped into the healthcare trend of gamification.

Employers who are looking for creative ways to engage more employees in retirement savings may have a few new options.  The financial services industry has been borrowing behavior tools from the healthcare industry for the last few years with great results.


Recently, the financial services industry tapped into the healthcare trend of gamification. Healthcare providers found that picking up elements of game playing (such as accumulating points, potentially having competition with others, or creating a system of rules) encouraged chronic disease patients to improve their preventative care behavior.  By adding in mechanics of games, patients were more motivated to participate and engage with online systems that also included reporting health status.  Traditionally, gamification is aimed aid taking an existing method of interacting with clients or patients and amplifying it by giving the patient more of a sense of control and interaction.


As an example, Ayogo’s Empower app helps patients with Diabetes change their preventative care behaviors and record their activities to give better information to their health care providers. Once the behaviors become established, through routine game playing, the patients have developed healthier habits.


Leaning on this technique and recent research from MIT’s AgeLab, investment firms have begun their own gamification to encourage positive investment behaviors and habits. The theory behind gamifying investing is to help clients visualize retirement planning, often a process that is too large or too far in the future to feel concrete.  By creating a feedback system, through rulers, scales or hot zones, financial companies have been able to increase the feelings of empowerment among clients.  In 2017, Wells Fargo created an actual game of investing, called Retirement City, complete with graphics, which was intended to help clients learn about retirement and financial wellness.


How can employers use this gamification trend? Some advisors suggest trying a buddy system for encouraging investing. The idea is similar to gamification in that it asks investors to monitor and report back on their behaviors and goals each week. But the buddy system relies on the employee to course correct any behavior that goes astray, and it might not be the best method to introduce new ideas or challenge old ones.  And, if employees are hesitant to invest because of a lack of knowledge, the buddy system might not help.


Instead,  there is a step beyond the buddy system.  Research has shown that peer education may be more successful in changing behaviors and in encouraging development of positive behaviors.  Just as gamification began with the healthcare industry, so too is the healthcare industry leading on peer education. 


Peer education connects community members with health information to educate others who might have similar social or cultural backgrounds. It’s a step beyond the suggested buddy system, in that one party has more information than another.  In the healthcare field, the peer educators have found greater success in changing behavior through peer education than through education from professionals.


Combining a few of these elements together might overcome some blocks to engaging employees in retirement plans. Investment mentoring, in general, could have similar positive effects (this is not to be confused with any online education programs of a similar name) as peer education.  Given that gamification may be limited by the employees that engage with a retirement plan, investment mentoring (e.g, one on one peer education) could resolve that concern.  It may also fit in with the need to enhance financial literacy among employees.  Twenty years ago, financial products were less complex and the goal of a plan sponsor then may have been to encourage enrollment and investment. Now, consumers have a dizzying array of credit, debt, investment and savings alternatives.


Where literacy is an issue, some healthcare and health lifestyles offer one on one mentoring, as a more intense version of peer to peer education.  What is mentoring? According to Eric Parsloe of the Oxford School of Coaching & Mentoring it is "to support and encourage people to manage their own learning in order that they may maximise their potential, develop their skills, [and] improve their performance…." Health mentoring programs focus on the transition in behavior from an older pattern to a newer one.  In those programs mentees are paired with those who have long-term experience but have a similar cultural background. Those mentors also help plan or address unexpected events using their experience. 


Investment mentoring can focus on the transition from a paycheck to paycheck view to one that increases the skills needed to save, including planning and forecasting, budgeting and understanding savings and investment plans. By offering an investment mentoring plan, a plan sponsors can also learn greater insight into employees who may not be participating in the retirement plan and develop more programs for those employees.


And mentoring programs may also engage mentors in sharpening their own skills. By preparing mentees for new challenges, mentors also are asked to evaluate their own skills and planning. Mentoring may also help bridge cultural gaps in a financial advisor and some ethnic communities, who would look more to an elder for advice or education than to a consultant or professional.  This also keeps the mentor feeling culturally engaged as well.


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