Determining consumers' intention to use unit trusts

Chantal Rootman,Janine Krüger

doi:10.4102/jef.v9i2.51

Abstract

The savings rate among South Africans is too low, and increasing the savings rate is critical for the financial wellbeing of citizens and for the country. Many South Africans do not make use of formal savings products, including unit trusts. However, there is a need to increase the use of unit trusts and thus the savings rate, and ultimately the financial wellbeing of consumers. Unit trusts are well-designed savings/investment vehicles, allowing for small investment amounts with affordable cost structures catering for consumers with different risk profiles. Therefore this study will focus on investigating consumers’ perceptions of unit trusts by identifying the factors which influence consumers’ intention to use unit trusts as an investment vehicle. A quantitative study was employed and for the empirical investigation a convenience sample of 509 respondents completed a self-administered, structured questionnaire. The data was quantitatively analysed and the main results showed that the Accessibility and Benefits of unit trusts are the most important factors influencing consumers’ Intention to use unit trusts. The strategies explained in this study may assist financial service providers in encouraging consumers to use unit trusts as an investment vehicle. This may increase the country’s savings rate and ultimately improve the financial wellbeing of South Africans.

Highlights

According to Roberts, Struwig and Gordon (2014:1), the Financial Services Board (FSB) in South Africa is concerned about the financial wellbeing of the country’s citizens, as the organisation aims to help South Africans to “manage their personal and family financial matters soundly”. This means that proper financial planning and appropriate financial behaviour is needed
By understanding consumers’ perceptions of unit trusts, and by knowing which factors influence consumers to possibly consider unit trust investments, recommendations can be proposed to financial service providers, including independent financial advisors/planners
In order to determine where the differences in perceptions lie, Bonferroni tests were performed. This differences are translated by the mean scores, and the results show that respondents in both the age groups 50 to (M = 4.142) and to 59 (M = 4.186) perceive the benefits of unit trusts to be more than the respondents in the age group 18 to 24 (M = 3.793)

Summary

Introduction

According to Roberts, Struwig and Gordon (2014:1), the Financial Services Board (FSB) in South Africa is concerned about the financial wellbeing of the country’s citizens, as the organisation aims to help South Africans to “manage their personal and family financial matters soundly” This means that proper financial planning and appropriate financial behaviour is needed. The individual household savings rate in South Africa has decreased over a long period due to the high unemployment rate, low income levels as well as the increased availability of credit (Aron & Muellbauer, 2011:3). This led to the increased indebtedness of the country’s households (Incentivising non-retirement savings, 2012:6). In 2011, debt consumed nearly 75% of South Africans’ disposable income, and these too high levels of indebtedness increase households’ financial vulnerability (Incentivising nonretirement savings, 2012:7)

Objectives

Methods

Results