Retirement planning is no easy subject, which is why it’s surrounded by a veritable army of specialists.
Even the experts tend not to know everything – that’s why they work in teams – so how can we expect our highly dependent clients to know how to make the right decisions?
Three economists examined this crucial question and wondered if the oldest of teaching aids might offer the answer: storytelling. From cave dwellers to Homer, from Aesop to Twain (Sam Clemens, we mean, not the country singer), stories have made essential truths memorable. But does it work in the pedestrian world of retirement planning?
The economists cooked up two versions of presentations on two subjects, annuities and Social Security claiming practices – two tangled webs if ever there was a pair. One presentation was presented in written form, the other in video. Respondents were shown both and then asked to complete a test of their knowledge.
Respondent who’d heard the vignettes on annuities scored an average score of 87%. A control group was employed that didn’t see the video or hear the written story – they scored 77%. For Social Security, the numbers were 90% vs 76%. It seems clear that storytelling, even when employed in a rather mundane field, helps increase people’s understanding of difficult topics.
The survey’s authors noted that while comprehension was increased, there was no viable evidence suggesting they were more likely to use annuities as a solution in retirement planning, or that it conditioned their choice of retirement age. Clearly, many factors beyond simple understanding affect those decisions.
Written and video presentations were equally effective in teaching the survey subjects, but when asked their preference, people said that videos should not be seen as a substitute for hard-copy presentations.
For more information, please read:
Stories Help People Understand Annuities: Economists | ThinkAdvisor