It’s Not Just A Plan: It’s People!

Jan 25, 2026

Given all the big words, complex regulations, legalities and operational details involved in sponsoring a retirement plan, it’s easy to lose sight of the people the plan is intended to benefit: employees and their families (aka beneficiaries). If you sponsor a retirement plan, and find yourself wondering why there is not more active participation, you may find it helpful to explore what behavioral finance experts call “emotional friction,” and think about how you can help employees overcome it. Hint: it involves trust–lots of it.

Emotional Friction?

It’s no secret that Americans generally don’t save enough. Since most people can’t just keep working forever, the savings deficit becomes a very real problem—and often far too late in life to do much about it. Behavioral economist, Shlomo Benartzi has made it his mission to help us “save for tomorrow today” (as opposed to “saving for tomorrow, tomorrow”) by addressing the emotions that tend to interfere with our more rational thoughts. Summing up key points from the related research, Eric Dyson of 90 North Consulting concludes: “Employees aren’t simply rational decision-makers. Their reluctance to save consistently in 401(k), 403(b), or 457(b) plans is often rooted in emotional friction: fear, confusion, or feeling overwhelmed.”

So what can plan fiduciaries, like advisors and sponsors do in the face of emotional friction? According to Dyson, and several experts interviewed on his podcasts, the path to more active engagement in employer sponsored retirement plans is laid by building more trust, through consistent attention to these aspects of the retirement plan:

Speak in plain language: Replace jargon with messages that resonate emotionally and practically.
Establish consistency: Ongoing touchpoints—onsite, virtual, or hybrid—signal reliability.
Segment and personalize: Tailor education by life stage and priorities. J.P. Morgan research shows personalization can increase engagement by up to 40%.
Start with a baseline survey: Gauge employees’ confidence, awareness, and financial stress levels.
Use stories, not stats: Share relatable success stories.

Keep in mind that developing real trust takes time, as Dyson reminds us: “Trust is the language employees speak before they act. When they believe the plan is for them and that the people guiding them are invested in their success, everything changes.” People, as we all know, are complicated, and so too is the behavioral change necessary for improved savings habits: “Behavioral change follows the trans-theoretical model of change: pre-contemplation, contemplation, preparation, action, and maintenance. Adapting sustainable savings behaviors can take 6 to 12 months or more.” Accordingly, on the journey to supporting increased retirement plan savings, don’t merely eye the bottom line and give up in frustration—-look for signs of momentum, and keep track of your efforts to create it using these action steps as suggested by Dyson:

Consider launching an annual trust and readiness survey.
Build a calendar with quarterly, customized education touchpoints.
Refine all participant materials using language that informs and empowers.
Share internal success stories—highlight real employees with real progress.
Track trust indicators alongside participation metrics.

Plan Sponsors Are Human Too: Mistakes?

As a retirement plan sponsor, you are a fiduciary, and that means you are obligated to take better care of other people’s money than you do of your own. To say the least, that’s a serious responsibility. Retirement plans are complicated, and even with extreme diligence, mistakes are likely to occur. When they do, defense against ERISA investigations and allegations is costly, averaging upwards of $600 per hour.

You can never fully eliminate the risk of being held personally accountable to the plan, participants and beneficiaries. Outsourcing plan services does not free you from these risks: as a sponsor, you choose the service providers and remain ultimately responsible for their performance. You can, for example, be held personally liable for:

Compliance: Do operations adhere to the plan document, and government regulations? Are you up to date with all cybersecurity protocols?
Decisions: Do you have the right advisor, and investment options?
Cost control: Are the plan fees reasonable and services solid? Have you monitored?
Cybersecurity: Are you adequately mitigating threats to the plan, and ensuring all service providers have strong protocols in place too?

If you face claims that you have failed in your responsibilities as a retirement plan sponsor, the only type of protection that shields you personally is Fiduciary Liability Insurance. Colonial Surety Company offers an efficient and affordable Fiduciary+Cyber Liability Insurance bundle specifically to protect retirement plan sponsors. For an annual cost that’s less than just one hour with a defense attorney if trouble strikes, you’ll be armed with:

$1,000,000 for Defense and Penalties if you are faced with alleged or actual breaches of fiduciary duty.
Cybersecurity Coverage for the business and plan, which addresses Department of Labor recommendations, and includes expert response services to curtail damage after an incident.

Get protected now: Fiduciary+ Cyber Liability Insurance

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