Consumer Behavior Expert to Share Insight at Amplify

Punam Anand Keller was surprised when a colleague invited her to speak at a retirement savings conference.

Keller, who earned a doctorate in marketing from Northwestern University, had focused her research on how consumers make health-care choices.

She tackled questions that included why some people get flu shots while others don’t.

“My colleague said, ‘Just come talk about what you do in health,’” Keller remembers.

Reconsidering the invitation, Keller thought about what wealth and health have in common.

It’s All About Simplifying Choice

Wealth, like health, often involves extremely complex information. And Keller suspected that confused consumers confronted with health or financial decisions may have the same default: They avoid making any decision at all.

That launched Keller on a research path that combines psychology, sociology, finance, economics and marketing. She regularly speaks before health and financial professionals and says she looks forward to speaking at the Northwest Credit Union Association’s Amplify Convention in October.

She relishes the challenge that comes with helping consumers make better and more informed choices.

“People are becoming more and more responsible for the outcomes of financial and health decisions,” Keller says. “Suddenly you’re automatically enrolled in a high-deductible health plan just like you were suddenly enrolled in a 401(k) plan.”

Keller is a professor of management at Dartmouth’s Tuck School of Business and an internationally recognized expert in health promotion and financial literacy. Her research is supported by the National Cancer Institute, the Centers for Disease Control and the National Endowment for Financial Education.

Studying Student Loan Decisions

She recently partnered with the National Credit Union Foundation on a U.S. Treasury grant application proposing to create an educational program for students faced with college loan decisions. The idea is to reach students through credit union financial literacy fairs. Keller envisions a program that helps students project their finances five years after graduation and guide their choices today.

The goal is to help students think about their future income and how much of their paycheck will be consumed by a loan payment. And to communicate the hard reality that even if they declare bankruptcy, their Social Security benefits could be garnisheed to repay the student loan.

Keller has one fundamental hope about the exercise: Will students make different choices if they better understand the consequences of their borrowing?

Her research indicates they will.

“There is a lot of room for credit unions to help people. To help them understand this is where the majority of your money will go in the first year after you graduate, and in every year after.”
—Punam Keller

“There is a lot of room for credit unions to help people. To help them understand this is where the majority of your money will go in the first year after you graduate, and in every year after,” she says.

Keller talks with the energy and enthusiasm of someone who cares deeply about her mission. She describes herself as a “social marketer” and as someone who applies commercial marketing tactics to benefit the public good.

“Instead of market performance or profitability, the ultimate goal is individual and collective well-being,” she says.

The Cost of Not Deciding

Whether the issue is financial or health-related, Keller talks about the power of “enhanced active choice.”

For example, instead of automatically enrolling employees in a 401(k) plan, she suggests asking people to choose one of two carefully phrased options:

A: I will participate in the supplemental retirement plan offered through my employer because I want to take advantage of the match and I want to have more options for my future.

Or

B: I choose not to participate in my employer’s supplemental plan and I’m willing to forgo the match even though it means my future options may be more limited.

“People like to feel there’s not a cost to doing nothing,” Keller says. “I want them to know there’s a cost.”

Indeed, Keller’s study involving newly hired employees at Dartmouth College found simply asking the right question in the right way prompted people to save more or, at the very least, to take an active role in managing their accounts.

Keller and her colleagues focused their research on women and employees earning less than $35,000 a year. During interviews Keller’s team learned that the new employees were more worried about their current budgets than saving for future retirement. They also said they had no time to start or manage a supplementary retirement account.

Keller discovered that the booklet provided at the new employee orientations was thick with reasons why employees should sign up for the program. Too thick, in her opinion.

She and her team created a simple flyer to tuck into the benefits packet, which listed on the front the most commonly perceived obstacles to opening a retirement account, such as “I can’t afford it.” On the back the flyer offered counterarguments, including “You can start with only $16 a month.”

The team also showed videos during orientation sessions featuring actual Dartmouth employees talking about their personal savings goals.

The results surpassed expectations with a 56.2% increase in election behavior in the first 30 days and 147% increase over six months compared with a control group.

“The financial industry makes a lot of money from making things complex,” Keller says. “I think things should be simple.”

Editor’s note: Registration for Amplify Convention is open online. You can save $40 by registering by August 1.

Questions about this story? Contact Lynn Heider: 503.350.2225, lheider@nwcua.org.

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