Individual and peer effects in retirement savings investment choices

This paper explores the role of a member's peers in the member's propensity to make a change to their retirement savings investment strategy. Given that evidence indicates that the majority of individuals do not seek professional financial advice, we investigate whether workplace peers may be influential in member retirement savings investment strategy behaviour. We explore three ways a peer influence may manifest. First, we examine whether the likelihood that an individual makes an investment strategy change is related to what their work place peers do. Second, we explore whether the workplace gender composition (critical mass) is associated with the individual member's likelihood of changing investment strategy. Building on the second, our third interest is in the role of gender critical mass as a moderator of a member's gender on choice. The results suggest that member investment decisions are influenced by their peers' behaviour, especially the behaviour of workplace peers of the same gender. Workplace gender composition, on the other hand, does not alter member decisions.