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Discussions on long-term financial choice

Author

Listed:
  • Kuan Kiat Cheah

    (Australian National University, Canberra, ACT, Australia)

  • F Douglas Foster

    (UTS Business School, Sydney, NSW, Australia)

  • Richard Heaney

    (University of Western Australia, Perth, WA, Australia)

  • Timothy Higgins

    (Australian National University, Canberra, ACT, Australia)

  • Barry Oliver

    (University of Queensland Business School, Brisbane, QLD, Australia)

  • Terry O’Neill

    (Australian National University, Canberra, ACT, Australia)

  • Roslyn Russell

    (RMIT University, Melbourne, VIC, Australia)

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.

Suggested Citation

  • Kuan Kiat Cheah & F Douglas Foster & Richard Heaney & Timothy Higgins & Barry Oliver & Terry O’Neill & Roslyn Russell, 2015. "Discussions on long-term financial choice," Australian Journal of Management, Australian School of Business, vol. 40(3), pages 414-434, August.
    • Handle: RePEc:sae:ausman:v:40:y:2015:i:3:p:414-434
    DOI: 10.1177/0312896214532476
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    References listed on IDEAS

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    2. Nha Duc Bui & Loan Thi Bich Nguyen & Nhung Thi Tuyet Nguyen & Gordon Frederick Titman, 2018. "Herding in frontier stock markets: evidence from the Vietnamese stock market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 59-81, November.
    3. Linnenluecke, Martina K. & Chen, Xiaoyan & Ling, Xin & Smith, Tom & Zhu, Yushu, 2016. "Emerging trends in Asia-Pacific finance research: A review of recent influential publications and a research agenda," Pacific-Basin Finance Journal, Elsevier, vol. 36(C), pages 66-76.

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