Default Settings

I recently attended a benefits presentation hosted by my employer.  It seems that we are changing HR/payroll outsourcers and as part of the transition we were engaging the annual selections process earlier than is typical.  We are also using this transition as a convenient time to alter our overall benefits package.

In fairness, I still consider myself new, and I’m pleased with the package but I do notice changes having enrolled in June as a newbie and again in September as part of the transition.

One interesting change had to do with our 401k offering.  Our employer is auto-enrolling everyone into the program at a modest 2 or 3% contribution level.  Employees may alter their contribution levels or self select out of the program altogether, but starting in October, the default setting is participation.

I’ve heard of this idea before.  And my first reaction at that time may mimic yours – “you’re forcing someone’s behavior” and “personal choice is being removed from the process”.  But I quickly recognized this as lame, half baked thinking.  Personal choice remains.  One can elect to not participate in this model just as one had to elect to participate before.

The reality of choice remained, but the impact of not acting is really all that changed.

Give that a moment to settle.  The concept becomes more profound as your ponder it.

Under the old “opt-in” model, I must take action.  I must elect to participate in the 401k, decide my contribution level, and select my investment options.  That’s a lot of effort for someone who may intimated by the investment process.  And given the vastness of the options I have before me, and the countless other pulls on my time, I am likely to delay the actions that I may eventually take.  Assuming investing for one’s future is a good thing, my inaction leaves me with a negative outcome.

In the new “opt-out” model, I don’t have to take action.  My contributions, albeit smaller (or larger) than I might self select, are automatically pulled and deposited into an age defined portfolio that rebalances itself as I trend towards retirement.  For those intimidated by the investment process and subject to inaction; and still assuming investing is positive, inaction positions me well relative to my future.

The default setting is “Investment ON” which for the vast majority is clearly better than “Investment OFF”.

So about the time I come around to realizing the power of this approach, I can’t help but try to think of other ways I can leverage this principle in other aspects of my life.  How can I build a system or process that is designed to pull me in the way of growth and success?

Well, I can’t say that I have this one figure out just yet but it is something I think about and try to incorporate into my daily process.  Here are a couple examples:

Habits and routines are like default settings. 

  • I wake up at a certain time
  • I leave my keys and wallet on the same spot on the counter every day
  • I follow and chart a particular exercise routine
  • I adhere to a monthly budget
  • I auto pay my monthly bills

Of course many of these require a degree of discipline to stay on track.  For example, schedule disruptions such as travel for work has knocked me off more than one good workout streak and once off, I need to reset my mind and expectations – restore the default setting of working out – to get back on track.

Goal setting and taking incremental steps towards larger objectives are other ways of baking success building into your daily process.

Some ideas are more obvious than others and some yield results more quickly but all deposits of success are significant because collectively they both chart and propel our course.

What patterns or practices have you automated into your daily live that helps you achieve success?  Enter a comment below or log onto the site and share your best practices.  I’d love to learn how others define their blueprints for success.

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