It’s easy for financial experts to say what people should do to achieve financial well-being. We can rattle off rules of thumb like: contribute enough to your 401k to achieve the full employer match; set aside enough savings to cover three months of expenses in an emergency; and leverage health savings accounts and other tools to offset the costs of care. These tips can work, but they ignore the reality that many people can’t or won’t follow them. In our panel on Designing for Financial Behavior, we discussed how we can design tools to help improve people’s financial well-being while balancing what people should do with what they can and will do.
- Carly França, Director, UX Design, Fidelity Labs
- Danielle Blanch Hartigan, Ph.D., Assistant Professor, Natural and Applied Sciences, Bentley University
- Skyler Place, Ph.D., Chief Behavioral Science Officer, Cogito
- Matthew Rutledge, Ph.D., Associate Professor of the Practice, Department of Economics, Boston College
Three key themes emerged from the discussion:
Everything is in context. Too often, designing for financial behavior neglects to consider the whole person. Focusing on one area of behavior may overlook the impact of other behaviors or life events. For example, França and Rutledge both mentioned the significant effect that educational debt has on people’s ability to save for retirement. Because accruing educational debt and retirement are often separated by decades in a person’s life, we may not consider them as tightly linked events, but in fact the data shows that they are. Rising educational costs threaten millennials’ progress toward retirement goals. Not taking this into account when designing retirement planning solutions limits our efficacy. Designing for financial well-being means zooming out to consider the broader context, as well as zooming in to consider the micro-behaviors that contribute to outcomes.
Perfect is the enemy of good. By asking our users to behave like experts, we risk them opting out of financial well-being behaviors entirely. For example, Hartigan talked about how research on shared decision making in health care can be applied to financial behaviors; people react negatively to being told what to do. A more successful strategy is to empower them with simple information and then support them as needed in making a change. We don’t need to expose all of the logic behind financial recommendations to our users (although making that information available to those who are motivated and capable of consuming it can engender better trust). While it can be difficult for experts to deviate from the ideal set of recommendations, it’s realistically better to get people to do something than to overwhelm them and have them do nothing.
We can use technology for positive change. Artificial intelligence and machine learning will become part of designing for financial well-being. If we want to avoid that technology being used for malicious intent, we need to think carefully about how to incorporate it into our designs. Place uses machine learning at Cogito to pick up on non-verbal cues in conversations and coach live support agents to offer more empathic and effective assistance; with finances being such an emotionally laden topic, this sort of application could help guide more meaningful conversations between advisors and clients, for example. The key is to be deliberate and intentional about how and where we use technology and to consider about the long-term impact of misuse. As Rutledge put it, the greatest risk to these technologies is that we break the trust between people. And as we all know, once you lose trust, it’s very hard to get back.