A Financial Psychology Intervention for Increasing Employee Participation in and Contribution to Retirement Plans: Results of Three Trials

Abstract

Despite decades of retirement plan enrollment meetings, many employees fail to fully engage in their employer-sponsored retirement plans. Under the framework of the Transtheoretical Model (TTM) of Behavior Change, this study examines the effectiveness of a financial psychology intervention designed to increase engagement in employer-sponsored retirement plans across three employee groups: 107 employees of a regional bank, 43 employees of a custom manufacturing company, and 48 employees of a construction company. Following the intervention, significant changes in plan participation, contribution rates, and one-on-one follow-up meetings with financial advisors were observed. Thirty-eight percent of previously unengaged employees became plan participants, 68% requested and held meetings with financial advisors, and contribution rates increased by 39%, resulting in a total $199,445 increase in first-year annualized contributions and employer matching funds across the three groups.