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Male KiwiSaver members take more investment risk on average compared to females, a new Melville Jessup Weaver (MJW) study reveals.
But the unsurprising result might not confirm the gender cliché of men as testosterone-fuelled, devil-may-care gamblers, according to the MJW report compiled for the Retirement Commissioner.
Hormones seem the least likely explanation for the male KiwiSaver member risk bias that MJW found increases significantly with age in an inverse relationship with testosterone.
While the analysis of some 2 million plus KiwiSaver accounts shows men overall invest more in growth funds and sector-specific share options, the “differences are very small in the youngest [up to 30] category”.
“The largest differences between males and females are seen at older ages, with more money invested by males remaining in growth funds into their older years, while females’ balances tend to shift into more conservative funds more significantly,” the MJW report says.
On average across all age cohorts in the study, male KiwiSaver members held over 40 per cent in growth funds compared to almost 35 per cent for women: the proportionate male-female growth fund differential rises from 1.3 per cent for the youth (under aged 30) category to more than 7 per cent for those in retirement.
The paper, authored by MJW principal, Ben Trollip, cites an earlier study by the New Zealand Society of Actuaries’ Retirement Income Interest Group that found KiwiSaver investment choice was more correlated with balance size than gender.
“Given that males on average have a higher KiwiSaver balance than women (approximately $31,000 versus $25,000, as at 31 December 2022), we cannot conclude from this data that males are more risk-seeking,” the MJW report says. “A possible alternative explanation is that it is males’ higher balances (on average) which have led them to be more risk-seeking on average.”
Although the MJW paper does not explore the notion, financial advice may play a part in KiwiSaver asset allocation as investors with large balances are more likely to seek professional guidance.
However, an intriguing analysis – albeit now almost 10 years old – of more than 400,000 KiwiSaver accounts found women did seek financial advice more than men.
According to the 2014 study published in the Pacific Accounting Review: “First, female investors, relatively older investors and investors with higher levels of funds under management (invested wealth) are more likely to receive financial advice. Second, advised investors hold more equity assets. Third, differences in performance between advised and non-advised accounts are marginal.”
The MJW exercise carried out for the Retirement Commission (Te Ara Ahunga Ora) also confirmed a growing KiwiSaver balance gap between male and female members.
During a negative year for almost all asset classes, the average male KiwiSaver balance fell 3.2 per cent to almost $31,500 while female counterparts ended 2022 down 7.1`per cent with a median balance of $25,144: the distance between average male and female account sizes grew from 20 per cent at the end of 2021 to 25 per cent at the latest count.
“The widening gap does not appear to be explained by fund choice, withdrawal, or suspension behaviour of women compared to men in this time period,” the Retirement Commission says.