Money Moves

Cultivating informed investors

by Grace Chan

MPF provider plans expansion to capture new provident fund opportunities

Lau Ka-shi, managing director and CEO
Bank Consortium Trust Company Limited
Photo: Nolly Leung

With the impending "employee choice", Hong Kong's workforce will be allowed to select the mandatory provident fund (MPF) service providers of their choice most likely by 2011. In light of this, a Hong Kong MPF company has plans to broaden and deepen investor education and launch additional funds to meet market challenge head-on.

"With up to 80 per cent of employees paying scant attention to their MPF accounts, we are more concerned about their financial literacy," says Lau Ka-shi, managing director & CEO, Bank Consortium Trust Company Limited (BCT). "While it is not advisable for people to switch their funds too often, they should review their MPF accounts on a regular basis."

Ms Lau stresses that MPF investment is not like buying stocks or other short-term speculations. Investors should learn more about investing for retirement and assess their own risk tolerance before choosing a fund.

For this reason, BCT aims to increase members' sense of engagement by helping them raise financial literacy through channels such as investment seminars, publications and electronic media.

Innovative marketing

Currently, BCT's corporate website brings its members ease of use by offering a rage of unparalleled services from personal information management to fund switching and e-statements.

In a bid to appeal to the younger generation, BCT built on the functionality of its corporate website and launched in June this year an innovative "Retirement Rainbow" investor education website, the first of its kind among MPF providers.

The innovative online portal features two animated "MPF ambassadors" Jack and Gump, who star in a series of educational investment comic strips — a specially designed vehicle to deliver practical tips and knowledge on MPF.

To stimulate the interest of "generation Y" in retirement planning and investment, the website also incorporates an online game where players maximise their retirement returns and minimise risk in order to win.

The website focuses on investment information and features a wide range of lifestyle articles covering topics such as health, food, travel and relationships.

More choice

People tend to shop around when buying an apartment, but they often fail to compare the service quality or fund performance of their MPF providers. "This may compromise the quality of their retirement life," Ms Lau notes.

BCT issues biannual statements and provide quarterly e-statements to members, as well as quarterly fund performance fact sheets with market commentary, helping them to keep track of the fund performance and to make informed investment decisions.

Ms Lau anticipates that the implementation of the new MPF legislations will lead to an increased number of new funds and those with reasonably low management fees would become more popular in the market.

Recently, BCT further expanded its fund range by launching a Hang Seng Index Tracking Fund and a Hong Kong Dollar Bond Fund with annual management fees at 0.85 to 0.9 per cent and 1.25 per cent respectively.

"Our net management fees are among the lowest in the market. Members should consider net fees rather than looking only at the size of discounts offered," Ms Lau advises.

Competitive edge

As of August 2009, BCT provided MPF services to more than 600,000 members, with over HK$50 billion's worth of asset under administration. The company attributes its leading position to its strong corporate governance, "multi-manager" investment approach, customer service excellence, the use of cutting-edge IT technology, and the extensive branch network of servicing banks.

"No single fund manager can excel in all sectors or markets. By employing eight independent fund managers, we aim to diversify risk and maximise investment returns for our members," Ms Lau explains.

While most MPF service providers also engage in other financial service such as banking and insurance, BCT always stays focused on the MPF and pension business. The company observes stringent compliance standards, using innovative technology to improve efficiency, accuracy and flexibility in fund and scheme administration.

"We expect the rate of transactions to increase once employees are allowed to choose their own funds and we see technological efficiency and personalised services as essential to maintain our competitive edge," Ms Lau says.

BCT currently has about 330 employees. "We need new recruits for areas such as customer service, operations and IT," Ms Lau notes, adding that the company plans to expand its workforce by some 10 per cent next year.

Preparing for the future

  • Focus on investor education to increase members' engagement with their MPF funds
  • Brand-new e-platform meets the needs of the younger generation
  • Introduction of new fund choices with low management fees
  • Expansion of workforce to maintain competitive edge and enhance service standards

Taken from Career Times 09 October 2009, p. A5
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