Encouraging Japanese households to invest for the long term

Committee:
Asset Management
status:
Some progress
Published:
Distributors have been changing their business model under the pressure of the “Customer oriented business”, tax incentive must follow to enable the new business model to generate positive flows towards financial products and specifically mutual funds. This is especially important after the sharp market decline across all asset classes generated by the Coronavirus turmoil, to bring back attention towards fund investing especially for new investors. In this context, boosting financial literacy will be key, at all levels and for all generations, including through the websites of Corporate Defined Contribution (DC) and iDeCo (individual Defined Contributions) platforms.

Recommendations

  • Increase the maximum yen amount that can be saved tax free in NISA, Junior NISA and DC platforms, especially if those amounts are funded by conversion of deposits.
  • Change the default options for DC schemes to long-term financial investment products.
  • The Japanese Government should foster and publicises the provision of IFA (Independent Financial Adviser) services – with services provided in-person or online – to help boost household investments.