Making A Game Out Of Financial Planning

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Buckingham Strategic Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Read all of Michael’s articles here.

What Is Gamification?

The basic concept of gamification is to apply the design concepts and techniques used in games (especially video games) to help people change their behaviors. Typically, this is done by using various means that show people the steps to take to improve their situation, and establishing rewards that encourage them in a positive direction.

The video below shows an example of gamification from another context where behavior change is important - speeding. What started out as an entry in a contest for how to help people obey speed limits turned into a live experiment in Sweden, with a video camera that not only took a picture of speeders to record their violations, but also took a picture of those who obeyed the speed limit and submitted their name into a lottery to win a portion of the fines collected from the speeders! So not only was it still a game that punished those who did wrong, but it also rewarded those who did right and obeyed the limit. The results were striking - the average speed of cars passing the camera dropped from 32km/h before the experiment to 25km/h after. There were even rumors that some people would go out of their way to drive through the intersection, or even circle the block and drive past the camera again, going the legal speed limit, just for a second chance to win!

The basic principle of gamification is to recognize that as human beings, we have a predisposition (albeit some more than others) to find games and engage in them, whether it's earning virtual points and achieving status levels (a popular "game" of customer loyalty programs), checking in for "achievement badges" on FourSquare, or joining a fantasy football league as a way to engage in a game that can be played within a larger game that the average person can't participate in directly. The technique has also had recent success in the world of fitness as well, from Fitocracy to exercising with the Wii gaming system.

Finding The Game(s) In Financial Planning

So what kinds of games can be played in the world of financial planning? It's important to note that effective games don't have to be elaborate, as even very simply goals and mechanics can still inspire and motivate change. For instance, a recent Mint.com article notes that one way they create a "game" is by simply adding various progress bars (like a thermometer-shaped graphic that mimics a charity's fundraising campaign goal progress), that inspire people to follow through. After all, who looks at a half-filled progress bar and doesn't feel the urge to see it through?

Another example in the financial planning context is what Dave Yeske of Yeske Buie shared in an article last year: their firm provides every client a personalized private client pages on the firm's website, where the landing page for each client is a list of their pending financial planning action items, indicating what needs to be done, who is responsible, and a check-off column to mark items when completed. As Yeske notes, "our clients want their check marks!" In fact, Yeske has said that sometimes clients will go out of their way to contact the firm, just to tell their planner that an action item was done... so the client can see it checked off the list!

Other ways to support gamification in financial planning might include making the process of financial planning projections more interactive - providing tools where the clients can actually move sliders to adjust their planning assumptions and taking their own retirement plan for a test drive. Another opportunity for finding the game is to set smaller, incremental goals and provide more immediate feedback. For instance, it's one thing to acknowledge during a review meeting that the client saved $10,000 last year, reducing their spending by $20,000, or first reached a net worth of $1,000,000; it's another if the client had a progress bar on their iPhone showing their status, and a congratulatory acknowledgement the day they first reached their goal milestone.

Supporting Financial Planning Games

Up until now, the primary barrier to making effective "games" in financial planning has been technology, which limits how quickly and effectively a client situation can be monitored, with feedback provided to the planner and client.

However, these barriers are already coming down as we enter the digital age. The first steps will simply change how financial planning is delivered, and then help improve how the plan is monitored on an ongoing basis, leaving both the client and planner with more up-to-date, accurate information.

The next steps will be to take the more continuous flow of up-to-date information, and turn it in mechanisms that provide the kind of feedback necessary for a good game. As the video above highlights in the speed limit "game" - instantaneous feedback helps to shape behavior. Few people would have likely adjusted their driving behavior if, instead of a giant sign showing a green thumbs up or a red thumbs down, a confirmation of being entered in the good-driver lottery was mailed out a week or two later. In a similar manner, delaying feedback about goal attainment to a few weeks or even months later (whenever the next plan review meeting is!) has far less effect; as technology allows people to know, immediately and at any point in time, the progress towards their goals and the effect their actions have on the outcome, so too will behaviors change more quickly.

However, the limitations from technology doesn't mean initial steps can't begin. As the Yeske example highlights, parts of the plan that move more slowly - like the completion of action items - can become a game to itself, simply by providing a feedback mechanism for clients to see the status and desire to improve it (a list of incomplete action items on their private client page). Similarly, the research on gamification would suggest that providing clients in the form of incomplete checklists and partially completed progress bars may have a more motivating effect than we realize - it's human nature for most to feel compelled to finish when provided such feedback, which in the process changes behavior and helps clients to achieve their goals!

So what do you think? Can you envision a "gamification" of some parts of financial planning? What games have you witnessed clients play, perhaps even without their realizing it? How could you change your process and delivery of financial planning to help clients further? Does gamification belittle the importance of financial planning, or help to make it more relevant and achievable?