Last week, Mr MPF had the pleasure of sharing the Institute of Financial Planners of Hong Kong’s (IFPHK) 2024 annual conference stage with two of Hong Kong’s leading and unconstrained free-thinking financial services personalities, Paul Gordon, author of “Spenditude: A life changing attitude to money”, and Kevin Li the General Manager and Head of Hong Kong for digital advisor “Syfe”.
Simply put, the panelists were asked to address the question “Are people wrong about MPF performance?”.
Spoiler Alert: Yes they are.
But the reasons why, what needs to change, and the catalysts for change will surprise even those amongst you who consider yourselves amongst the most unconstrained of free-thinkers.
What do Tesla cars and Hermes handbags have to do with MPF?
Fun fact 1: Did you know that a Hermes Black Kelly 25 handbag is more valuable than a 2024 edition of a Rear Wheel Drive Tesla 3? At $258,000, it’s no wonder those who own the handbag love, value, and nurture it; rightly giving it the love and attention something so valuable deserves.
Fun fact 2: Did you know the average MPF account balance is approximately $262,000, $4,000 more than the aforesaid handbag? More valuable, yet seemingly unloved, unvalued and likely less nurtured. The question is why?
Has MPF ever been promoted as a benefit?
MPF has never been promoted as a benefit, rather MPF’s “(M)andatory” nomenclature has always been the focus, an obligation, not a benefit.
Leading up to MPF’s commencement in December 2020, to avoid penalties many employers (metaphorically) blindly signed up to M(andatory)PF without due consideration for employees’ needs, and those employees, many of whom struggle to pay for day-to-day necessities often lack the foresight to look long term, and with account balances starting at zero, there was little motivation but at $262,000 things are suddenly very real. Imagine crashing your Tesla or damaging the leather of your Black Kelly handbag. You’d be mortified. Firstly, you’d likely do whatever it takes to prevent it and if it happened, you’d do whatever it takes to repair it. It’s what you do if you love and value something.
Value and love your MPF account, its more valuable than a car or a handbag.
How would two free-thinkers help MPF members improve their MPF performance?
As the Head of Hong Kong for Syfe, a leading digital advisor, one would expect Kevin Li to suggest “effective advice”, but what is “effective advice”?
Syfe recently announced a watershed digital advice initiative with Manulife Provident Funds Trust Company Limited, trustee for the Manulife Global Select (MPF) Scheme, an MPF Ratings’ Gold rated MPF scheme. Within MPF “advice” is a loosely used term but for MPF members it’s important to know the limitations of “advice”.
According to the MPFA’s June quarterly Mandatory Provident Fund Schemes Statistical Digest, there are almost 39,000 individuals who are registered to carry out MPF regulated activities, but those activities may preclude investment and fund selection advice. Technology combined with the appropriate licences opens the advice market, benefiting all MPF members and particularly those currently serviced by intermediaries who are unable to offer full scale advice.
Digital advice delivers scale and unemotionally leverages technology. In contrast, in his bestselling book “Spenditude: A life changing attitude to money”, Paul Gordon shares the human behaviours that affect investment outcomes. According to Paul, MPF members need to change their mindset to money, our perspective on money is established by the time we turn seven and it is our attitude to money and overcoming barriers that will determine our financial future.
Two people resolving the same conundrum in two very different ways.
Mr MPF’s personal take away is that one cannot flourish without the other. People like Paul, Kevin and MPF Ratings are in positions of privilege to positively affect the lives of MPF’s 4.75m members and the reality is MPF performance should not be a question of good or bad, and no, it shouldn’t be about Tesla cars or Hermes handbags either. A discussion about MPF performance is an empowering conversation to affect members and their advisors to make better decisions. Better awareness and the right tools are enablers to make better decisions, decisions which will assist change the MPF mindset from being (M)andatory to being a benefit.
This article was written by MPF Ratings, Hong Kong’s independent provider of MPF research, views and education.
The information contained in this blog is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
