Discussions on Long-Term Financial Choice

Posted: 18 Sep 2015

See all articles by Kuan Kiat Cheah

Kuan Kiat Cheah

Independent

F. Douglas Foster

The University of Sydney - Discipline of Finance; Financial Research Network (FIRN)

Richard A. Heaney

University of Western Australia

Roslyn A. Russell

RMIT University; Financial Research Network (FIRN)

Date Written: August 1, 2015

Abstract

We analyse focus group discussions about long-run (retirement) financial decisions, and explore the extent to which participant responses are related to the oft-used behavioural explanations of financial choice. We find that persons of all ages understand the importance of long-term savings, but face many challenges in preparing for retirement. There is mixed support for a range of associated behavioural explanations. Complexity, relevance of decisions, and uncertainty come up repeatedly in all focus groups, irrespective of the age of the participants. The use of heuristics, confidence, costs of mistakes, mental accounting, and the importance of social interaction appeared of less immediate relevance to all groups. We discuss the implications of these findings for how the financial services and superannuation industries communicate with members. There appears to be a general view from the focus groups that breaking large, complex retirement decisions into more manageable pieces (based on personal circumstances) and providing more focused and relevant information to investors would result in more effort and care expended on retirement decisions.

Keywords: Financial choice, focus groups, retirement

Suggested Citation

Cheah, Kuan Kiat and Foster, F. Douglas and Heaney, Richard A. and Russell, Roslyn A., Discussions on Long-Term Financial Choice (August 1, 2015). Australian Journal of Management, Vol. 40, No. 3, 2015. Available at SSRN: https://ssrn.com/abstract=2661566

Kuan Kiat Cheah (Contact Author)

Independent ( email )

No Address Available
United States

F. Douglas Foster

The University of Sydney - Discipline of Finance ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Richard A. Heaney

University of Western Australia ( email )

Crawley
Perth, Western Australia 6009
Australia
0414700799 (Phone)

Roslyn A. Russell

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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