practice
Say the
Magic Words
Often the right phrase or story
can help planners persuade
their clients to act.
By Miriam Rozen
When Sarah A. Casey wants to prod corpo- rateexecutivestosell a greater portion of
their own company’s stock to diversify their portfolios, she poses a key
question: If you had that amount of
money in cash today, would you
spend it on buying that amount of
shares in your company?
“If you do not ask this question
often times, clients are complacent,
especially when [their company’s
stock] ... is appreciating,” says Casey,
an advisor at Mason Investment
Advisory Services in Reston, Va.
whose firm has $2.9 billion in assets
under management.
Does just the right word, phrase
or even story help planners get their
clients to behave in ways they might
otherwise resist — even though those
actions would boost their financial
well-being?
The answer, say advisors and academics, appears to be yes.
A National Bureau of Economic
Research study, published in Feb-
ruary, says that “simple and small
language changes” in written mate-
rial that companies distribute to
employees describing their 401(k)
options increased saving rates by
1.9%.
VERBAL CUES
What magic words might financial
planners choose to induce their clients to make better choices? More
importantly, when do these verbal
cues work?
The study’s authors write that,
in emails, they inserted cues of one
or two sentences that shared goals
or set savings thresholds, and sent
those to employees concerning their
401(k) plans. They then evaluated
the effect those emails had on the
recipients’ savings choices.
Including the phrase “a high sav-
ings goal” in emails to employees
“raises contribution rates by up to
2.2% of income,” the researchers
found. And when the emailed mes-
sages highlighted a higher savings
threshold in the employer-match
incentive, contributions rose by up
to 1.5% of income, as compared with
when the authors highlighted the
lower threshold.
SOLVING A MARITAL DISPUTE
A prospective client approached
advisor Paul T. Greenleaf of Round
Rock, Texas, with an uncommon scenario. The woman and her husband
had inherited a large sum and her
husband had insisted that they give
away their windfall.
