There is increasing evidence that member-provided education about investments is not leading to a change in investment behaviours, with the Russell Investment Group the latest to weigh in on the subject.
In support of work done by UniSuper and presented to the CMSF conference earlier this year, Russell’s Heather Dawson told the firm’s client conference last week that it was clear that “education is not enough” to improve savings and investment practices. “You need commitment devices,” she said. “It’s like having a buddy to help you give up smoking.” The latest innovations in the US were designed to address three things: the decision to save, the choice of strategy, and regular reviews. “The trend is a move from the DIY position to DIFM (do it for me).” This enlists the “inertia” which most members have, even after they have attended various investment education programs. The UniSuper study confirmed that while there was an increase in savings activity following member attendance at its education sessions, this did not last long. A minority of people who said they would lift their level of savings failed to do so. Dawson said the use of defaults which “turn avoidance into a virtue”, such as opt-out options rather than opt-in selection should be encouraged. A recent US survey showed that 70 per cent of members agreed in automatic enrolment through an opt-out selection and 66 per cent said they would approve of an auto-acceleration plan, which stepped up the savings under certain conditions. “We have to better design our choice packages,” she said.
The $34 billion Brighter Super is set to shift a significant proportion of equities assets in MySuper from passive to active management. Chief investment officer Mark Rider says the move is possible because of the scale created by mergers, and the fund will be looking to its newly appointed active managers to generate performance through the cycle by taking idiosyncratic risks.
Darcy SongJanuary 21, 2025
