Talking about super at work - how it affects our choices

Research from the Monash Business School has found that people tend to copy colleagues’ super investment strategies and choices instead of seeking tailored advice. The research used the Mercer Australia Super Trust (MST) administrative database to produce a sample of 46 sites, which included over 28,000 members. 

The research found that women tend to be less active in changing their investment strategy when there are more men in the office. This finding may affect the ways superannuation trustees communicate with and educate their members about their super.

Most Australians are not active with their superannuation and rarely assess any changes to investment strategies, spending most of their career in the default investment option.

Dr. Carly Moulang from the Department of Accounting has investigated the role that peers play in influencing individuals to change their investment strategy. She is also interested in understanding the phenomenon reported by super funds – a lower propensity of women changing their super settings.

Moulang explains that peers are influential to an individual’s financial choices. Workmates who have previously researched investment options and made changes to their strategies may share their knowledge and experience with their co-workers.

Individuals may perceive that their peers believe it is unwise or sensible not to take control of their investment strategy.

Moulang said that observing others and making social comparisons may help alleviate the uncertainty experienced by some when making complex decisions. This supports the identity economy theory, which asserts the importance of social categorisation, social context, and norms that feed into our financial decisions.

It also gives strong indications to super trustees how improved financial literacy around investments and retirement in the workplace could have a stronger flow-on effect than on an individual basis. Moulang cautions that observing an association between the behaviour of their peers and the likelihood of an individual making an investment strategy change does not mean a peer effect is triggered.

Moulang said external peer effects may arise in investment activity, such as a result of shared preferences among employees or common hiring practices within an employer.

The peer impact can be more nuanced, particularly around gender. Moulang said it has been found if there are more men in a workplace, they are more active in making changes to their super investments. The same has been found in female-dominated workplaces.

In male-dominated workplaces, females appear to undergo oppositional reactions where peer information about their male colleagues reduced the likelihood of them actively engaging with their super. This may be due to social comparisons made with their male peers, but it is also possible that females are excluded from observing their male peer’s normative behaviour, such as discussions about investments and savings.

The resulting complacency may lead to missed opportunities for women in terms of positive actions towards managing their super. This could be an important finding, as women tend to retire with less super than men. One of the outtakes from the study is the need for employers to understand how gender balance can impact individual’s super engagement.