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Financial advice and asset allocation of individual investors

Annie Claire Zhang (Department of Finance, Auckland University of Technology, Auckland, New Zealand)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 10 November 2014




The purpose of this paper is to explore the differences in KiwiSaver portfolio composition between investors who receive financial advice and those who do not.


Using proprietary data which contain information of 405,107 individual KiwiSaver accounts, this paper examines who receives advice, compares the asset allocations of advised accounts with non-advised accounts, explores the relation of asset allocation with demographic characteristics and compares differences in returns between advised and non-advised investors.


Three key findings are presented in this paper. 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.

Research limitations/implications

Panel data are not used, which prohibit investigating asset allocation choices overtime. The time series for returns is short, as KiwiSaver has only been operating since 2007. The total portfolio that people own is not known; thus, the values on investment fund information do not represent the total wealth of each person, as other accounts elsewhere may exist.

Practical implications

There are broad implications for the New Zealand capital market, retirement policy, financial advice industry and development of financial literacy programmes.


The paper examines individual investor behaviour on a nationwide sample and explores how receiving financial advice relates to asset allocation.



The author gratefully acknowledges encouragement and extremely valuable comments from Ben Jacobsen, Ben Marshall and Nuttawat Visaltanachoti (Massey University). Previous versions of this paper also benefited from comments from Bart Frijns (Auckland University of Technology), Glenn Boyle (University of Canterbury), Peren Arin (Zayed University), Andrew Karolyi (Cornell University), Julie Agnew (Mason School of Business), participants of the 2013 New Zealand Finance Colloquium in Dunedin, New Zealand and participants of the 21st Annual Colloquium of Superannuation Researchers in Sydney, Australia. This paper would not exist without the support and technical assistance of David Boyle (ANZ Investments) and Paul Kane (ANZ Investments). The authors also wish to thank Morningstar New Zealand and Roy Morgan New Zealand for providing time and access to data.


Zhang, A.C. (2014), "Financial advice and asset allocation of individual investors", Pacific Accounting Review, Vol. 26 No. 3, pp. 226-247.



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