December 11, 2007
It was a bit intimidating, Crummer EAMBA student Anthony Iorio admits of his first global-consulting project in New Zealand: “They handed me the car keys and said, ‘Can you do presentations here, here and here?’ and ‘See you at the end of the week.’” This, in a country where people drive on the opposite side of the road.
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After presenting a retirement workshop, Rollins MBA student Jason Graham (center) answers follow-up questions from audience members. |
Just like those driving patterns took some getting used to, New Zealanders are having to adapt to a new way of paying for retirement, called KiwiSaver, and it was the job of students like Iorio to help them navigate the road ahead. The workshops were arranged by
fi360 Australasia, a firm that supports a variety of investment fiduciaries across New Zealand.
J. Clay Singleton, professor of finance for Rollins’ Crummer Graduate School of Business, led five students on the trip to New Zealand, where they presented research findings and gave advice to more than 400 accountants, attorneys and financial planners.
New Zealanders used to pay for their retirements almost exclusively with a government pension, but now the country has introduced a self-savings plan similar to the 401K, Singleton explained. “People in New Zealand are not as familiar with investing in equities as we are in the United States, so this is a new world to them.”
Ross Fowler, managing director of fi360 Australasia, sponsor of the Crummer students’ trip, notes that even though the government is subsidizing a portion of the savings, the voluntary program has been slow to catch on, with only 10 percent of the workforce adopting KiwiSaver since its introduction earlier this year. “Part of it is that the choices are quite difficult to make,” Fowler said. There are about 40 providers and 180 options to choose from.
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Crummer School Professor of Finance J. Clay Singleton presents to an audience of New Zealanders during one of the group's retirement workshops. |
“Employers don’t want to put their finger on a supplier and wind up in trouble if it performs poorly,” said Fowler, “And financial advisers are often tied to particular suppliers. So it was an opportunity for an independent group, like ours, to come through [with advice].” Because KiwiSaver doesn’t have a history to track yet, Singleton and his students researched the performance of New Zealand’s “unit trusts”—mutual funds that are managed by the same companies that manage KiwiSaver plans.
“One finding that is similar to the United States and many other countries is that asset allocation is the single most important determinant of investment risk and return,” Singleton said. “Our review of the KiwiSaver plans also revealed that managers were not being very transparent about their plans for asset allocation.”
Singleton’s students spent a lot of time before the trip honing their presentation skills, and even rehearsing in front of first-year EAMBA students. “By the time we left, we were so well versed I could probably almost give the speech in my sleep,” said Kathryn Daugherty, a second-year EAMBA student who hopes to pursue a career in financial consulting.
The seminar audiences ranged from financial planners to a person in charge of payroll for a cab company, she said. “We had to keep those who were more savvy stimulated and, for those with less expertise, we had to take it to a level that they could understand.”
Though it felt a little odd at times to dispense retirement advice to people twice her age, Daugherty said her classmates’ MBA backgrounds lent credibility to their presentations. So did the fact that they were not endorsing particular funds, but a set of decision-making tools that investors could use.
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(From left to right) Jason Graham, Managing Director of fi360 Australasia Ross Fowler, J. Clay Singleton, Faaria Baboolal, Kathryn Daugherty, Katie Phillips (in front), Director of the Crummer School Center for Leadership Development Susan Bach (in back) and Anthony Iorio in New Zealand. |
Fowler described their visit as “extremely useful” to his company, its clients and the public. “I thought the reception was very good,” he added. “I had one bit of feedback from one larger employer in the health area, who said it was refreshing to have somebody talking about the topic without sounding like a used-car salesman from the investment-advice industry.”
And they’ve already begun to see some results. “The first is a heightened awareness of the basic investment principle that the decisions you make today have long-run consequences,” said Singleton. He also hopes that their work “sheds light on the need for additional disclosures.”
For the students, it was a great out-of-classroom learning experience. “The students saw how to apply research to a real-world problem,” Singleton said. “That is the focus of all our research here at Crummer. It’s practical, it’s applied, and, in this case, people were willing to pay for the results.”
