New Zealand’s Financial Markets Authority (FMA) on Monday announced it is launching a pilot project that aims to prompt retirement savers to seek out financial advice when they are about 10 years from retirement.
The regulator is working with ANZ New Zealand Investments Ltd., one of the country’s major financial institutions, to examine whether the communications that are sent to members of the retirement savings scheme, known as KiwiSaver, can be altered to prompt them to action.
In particular, the FMA is exploring whether behavioural insights can be used to push people to get retirement advice, or to use retirement-planning tools when they hit 56 years old. The objective of encouraging people to get advice when they reach age 56 stems from recent FMA research, which found that workers who start retirement planning at least a decade before they are actually due to retire have “the highest levels of confidence about funding their retirement.”
“This is why the pilot with ANZ is targeting 56 year olds. They’re at a critical moment when they’re still far enough away from retirement to make a real difference with the decisions they make now,” says Paul Gregory, director of external communications and investor capability, FMA, in a statement.
Increasingly, regulators around the world are examining how the findings of behavioural economists can be used to help improve investor protection. Earlier this year, the Ontario Securities Commission (OSC) published a report that looked at the growing use of behavioural insights by policymakers, indicating that it is planning to conduct its own pilot projects over the coming year that will utilize this research to identify possible practical applications for investors.
Read: OSC to embrace behavioural economics in the year ahead
The FMA is also working with two other providers of KiwiSaver accounts to study how improved interactions “could prompt more frequent and better decision-making” by investors, it says.
“We hope both pilots will show real and positive outcomes for both investors and providers, prompting other KiwiSaver schemes to take on board these insights,” adds Gregory. “We also think there are insights here for managed investment schemes in general.”
The behavioural insights pilot will run from May until the end of the year.