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Best Practices

Turn bad behavior on its head

By flipping the frame, we turn bad behavior (not saving) into good behavior (saving).

Christopher Carosa, CTFA, is chief contributing   editor for FiduciaryNews.com, a leading  provider  of essential news and information, blunt commentary   and practical examples for ERISA/401(k) fiduciaries,  individual trustees and professional fiduciaries.

Are you familiar with the concept of anchoring and how it produces bad behavior in 401(k) plans? Here’s the idea: People get stuck on the first thing they see. You’ve no doubt heard “first impressions are lasting impressions.” That’s anchoring.

People take the first thing they see and make all future decisions based on how they relate to that first thing they saw. If the second car you see costs $40,000, it’ll seem high if the first car you saw was selling for $25,000. On the other hand, that same $40,000 vehicle would seem like a steal if the first car you saw was instead selling for $65,000. What you see first influences everything you see next.

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Christopher Carosa

Christopher Carosa

Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).

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