Defined contribution plan administrators that want to boost members’ financial behaviour should follow the lead of superstitious sports stars by embracing the surprising power of rituals, according to a Toronto management consultant.

Kelly Peters, chief executive officer of BEworks Inc., told attendees at the Benefits Canada’s Defined Contribution Investment Forum in Toronto on Friday that it’s easy to scoff when tennis superstar Rafael Nadal begins fussing with court-side water bottles as part of his pre-match routine.

The Spaniard’s quest to make sure all of the labels are facing his side of the court is just one of a series of habitual practices he goes through during every match he plays.

“I’ll be the first to call it quirky,” said Peters, adding that studies of Nadal’s output suggest there’s something to what he’s doing. “It’s not the movement of the labels that has led to the success in the performance; it’s the underlying mechanism that the ritual has on the player.”

And it’s not just sports stars who can benefit from apparently irrational rituals, Peters explained, pointing to a body of behavioural economics research that shows they improve people’s management and acceptance of loss, as well as boosting their enjoyment of positive moments.

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In the financial world, a recent study aiming to boost the level of saving among Kenyans with little discretionary income measured the effect of a number of interventions. The researchers split the group, with some receiving text messages with varying versions of a reminder to save, while others got matching incentives of up to 20 per cent.

All of the tactics were effective, including some that doubled the average amount saved compared with a control group that had no interventions.

However, the most successful savers were those who received a gold coin with numbers around its perimeter that they could scratch. Members of this group were then to wrap the coin in tissue and store it in a box in a special place. Each time they made a deposit to their savings, they could scratch off one of the numbers. Individuals in this group saved four times as much money as the control group.

“It turns out that something unexpected gets more to the heart of our relationship with money,” than any of the more rational ways people normally use to improve financial behaviour, Peters noted. 

However, she warned that some rituals are better than others, with believability the key to being effective. According to research cited by Peters, the three characteristics of a believable ritual include having repetition, clear steps and a specified time. 

“If we’re able to make rituals that people believe in . . . then we’re on our way to making the difference between wishful thinking versus things that will lead to a meaningful outcome,” said Peters.

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Rituals can affect even skeptics with little to no spiritual beliefs, despite their protestations to the contrary. “Our actual behaviour belies us,” said Peters. “It turns out they get enamoured with the idea that this might actually have an impact.”

She suggested plan sponsors could harness the power of rituals in the development of basic financial plans, which are effective at improving savings habits among the small sector of the population that actually has them.

Peters said members could answer three questions: one about their current financial health, another about their cashflow expectations in retirement and a final one about the advice their future self would give about planning for retirement. 

The process could introduce rituals by instructing them to put each answer in a separate envelope along with some salt, writing particular words on the outside or adding some other performative aspects.

“These are the kinds of things that people believe are having an effect,” said Peters, who suggested the beginning of the year is a particularly good time to encourage such financial rituals. “We’re using this belief system, and rituals to get people to actually do something that will make a real difference in their lives.”

Copyright © 2021 Transcontinental Media G.P. Originally published on

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