Getting to the Root of Participant Behavior By: Clyde RosencranceMBA

Make no mistake about it: One of the characteristics lurking beneath participant behavior is procrastination. But just as automatic plan design is not a silver bullet that can solve the entire retirement savings puzzle, procrastination is not the only trait influencing participant behavior. There are four more universal traits that can keep us from achieving long-term financial security.

The best and brightest in the worlds of behavioral economics, psychology, and all of the behavioral sciences have dug into the reasons why we, as human beings, struggle to plan for the long term. And why our brains are just not geared to make long-term planning decisions.

Prudential Retirement’s work in behavioral finance has uncovered five behavioral challenges—universal traits—hard-wired in human nature that often keep people from achieving long-term financial security. By helping employees recognize and overcome the behaviors that may be holding them back, you are giving them the “nudge” it takes to encourage them to become more active participants in achieving their financial goals.

These five big behavioral challenges lie at the root of the financial difficulties of many people. 

Longevity Disconnect: I Might Live How Long?

Humans have difficulty making a connection to their future selves. We see our future selves as strangers and don’t feel compelled to take care of that stranger.

Procrastination: I’ll Do It Later
The average person procrastinates two hours per day. Why? First, we believe our future selves will be smarter than our current selves. Second, over the course of a day we make hundreds, even thousands, of decisions. Our brains get tired; so tough decisions lose out to easier ones. Even in our busy lives, it’s easier to daydream about the future than spend the time we need to plan for it.

Optimism Bias: It Won’t Happen to Me
Americans are optimistic. Why worry? We think things will turn out better for “us” than “them.” But this optimism can cloud our judgment and make us terrible at assessing risk. The result is we don’t take preparing for our future security as seriously as we should. 

Overreaction: I Just Can’t Resist
We know there are various ways our emotions impact our financial decisions. Many of our important decisions are guided by what others are doing, even when we know it may not be right for us. For example, people may flock to pull out of stock when the market is going down, only to miss the opportunity to catch the increase when the market moves in the other direction.

Impulse Control: I Want It Now
We are conditioned to want things now, even though resisting short-term impulses can pay off much more in the long term. The idea of waiting or resisting a temptation is painful. So the concept of putting aside money for far-off financial security is almost inconceivable.

Why Participant Behavior Matters
By identifying the invisible forces behind our predictably irrational behavior toward money, we can all help to reframe the retirement conversation.

When we understand the behavioral quirks that influence participants’ saving and investing behavior, we can evaluate the plan from an entirely new perspective. 

Things to Consider:

  • How can we assist employees in envisioning their future selves?
  • Have we chosen plan design options that help employees overcome procrastination?
  • Do the plan’s participant services address our tendency to underestimate risk?
  • How does the plan help employees stick with an appropriate mix of investments over time?
  • Is the plan designed to help employees choose saving for tomorrow versus spending for today?
According to a Prudential Survey*:
  • 56% of retirement plan participants said they struggle with the Longevity Disconnect behavior, find it hard to image themselves in years to come, and have difficulty understanding their future financial needs.
  • 24% with Optimism Bias
  • 13% with Procrastination
  • 7% with Overreaction
  • Less than 1% with Impulse Control

* Prudential Challenge Quiz, March 2015

Not recognizing one’s future self may be preventing participants from successfully planning for retirement.


Prudential Retirement has developed an extensive inventory of behavioral insights by working with leading experts who understand the ins and outs of human behavior. If you want to delve more deeply into how to have a new conversation about the behaviors that influence financial decision‑making, contact a Prudential representative.

Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT or its affiliates. PRIAC is a Prudential Financial company.

© 2017 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, the Rock symbol and Bring Your Challenges are service marks of Prudential Financial, Inc., and its related entities, registered in many jurisdictions worldwide. 
For Financial Professional and Plan Sponsor Use Only

Clyde Rosencrance is an Assistant Director at Prudential Retirement Services.

He can be reached at or 570-340-4401.

Clyde Rosencrance

Located in Scranton, PA, Clyde Rosencrance of Prudential Retirement Services supports the needs of the sales organization through RFP execution, presentations, industry research, data management and financial-advisor outreach. He also is responsible for territory development, uncovering new intermediary...

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