Australia vs India- Land of Opportunity

Investor mindset in Australia and India

Finance in Australia is backed by social security

Australia is called the ‘lucky’ country. It’s been rich enough to fund a social security system, which has allowed its regulators to implement a long-term vision for its pension savings. It has been able to raise the compulsory minimum contribution to superannuation from 3 per cent to 9.5 per cent. This has led to many regulatory changes, thereby guaranteeing not only a steady pipeline of funds under management for the industry but also enough complexity for the advice industry to be in demand. Investors have trusted the industry, sticking to default options of their superannuation plans, probably a little complacent with the belief that they can rely on the age pension if their super falls short.

In India, you would think the sheer size of the population should ensure a steady supply of customers. But nothing is as it seems here. Having grown up in an era of scarcity and with no social security to fall back on, Indians are comfortable with the certainty of fixed term deposits and brand of government-owned Life Insurance Corporation. They don’t trust the stock market, directly or through mutual funds, because of volatility and scams.

The asset management companies and distributors keep squabbling about whose job it is to educate the intermediaries or the investors. In fact, I find one theme pervasive through the industry – that of short-termism. Everyone wants to make money in the short-term, thinking they will do better when the market is ready.

The question I have for leaders in the Australian industry is – what would they have done if they were operating in Indian conditions? Tell me your opinion and thoughts.