Aegon (Netherlands)

PurposeThe authors develop and validate a conceptual model, the retirement engagement model (REM), to understand the relationships between behavioral engagement (retirement information search), cognitive factors and engagement (e.g. beliefs and financial knowledge), emotional engagement (e.g. anxiety), and socio-demographic factors. Approach: The authors derive the REM through a three-step procedure: (1) an extensive literature review, (2) interactive feedback sessions with experts to confirm the model's academic and managerial relevance, and (3) an empirical test of the REM with field data (N = 583). The authors use a partial least squares (PLS) structural equation model and examine heterogeneity through a finite mixture model.Design/methodology/approachAround the globe, people are insufficiently engaged with retirement planning. The customer engagement literature offers rich insights into antecedents, outcomes, and barriers to engagement. However, customer engagement literature lacks insights into cognitive, emotional and behavioral factors that drive engagement in retirement planning, a utilitarian service context, which is important for financial well-being.FindingsBeliefs such as perceived susceptibility, severity, benefits, barriers, and self-efficacy, together with trust and retirement anxiety, explain people's search for pension information. These factors can be used to define three clear, actionable segments of consumers.Originality/valueThe findings advance the customer engagement and transformative service research literature by generating insights on engagement with retirement planning, a utilitarian rather than hedonic service context that is especially relevant for financial well-being. The findings inform managerial practice and emphasize the relevance of including cognitive and emotional engagement factors that trigger behavioral engagement. The REM can help to improve pension communication. For example, the results indicate that marketers should stress the benefits of, rather than the barriers to, acquiring information.

Every year, usually in the month May, the European financial press refers to a—presumably—old and inherited market saying: “Sell in May and go away.” According to this saying, the month of May signals the start of a bear market, so that investors are better off selling their stocks and holding cash. There are two different endings to the saying. The first of these is: “but remember to come back in September”; the second is: “but buy back on St. Leger Day”—in which “St. Leger Day” refers to the date of a classic horse race run at Doncaster in England every September. According to the saying, stock returns should be lower during May through September than during the rest of the year, and although many Americans tend to be unfamiliar with it, Michael O’Higgins and John Downes (1990) report a closely related and similar strategy related to market timing. Referred to as the Halloween indicator, it is “so named because it would have you in the stock market starting October 31 and through April 30 and out of the market for the other half of the year.” This paper examines whether stock returns are indeed significantly lower during the May– October period than during the remainder of the year. While we report results for the month October, results are similar when we use September instead. Surprisingly, we find the Sell in May effect is present in 36 of the 37 countries in our sample. The effect tends to be particularly strong and highly significant in European countries, and also proves to be robust over time. Sample evidence shows that in a number of countries it has been noticeable for a very long time, and in the U.K. stock market, for instance, we have found evidence of a Sell in May effect as far back as 1694. We find no evidence that the effect can be explained by factors like risk, cross correlation between markets, or the January effect. We also try some * Bouman: AEGON Asset Management, P.O. Box 903, 2501 CX The Hague, The Netherlands (e-mail: sbouman@ aegon.nl) ; Jacobsen: Erasmus University Rotterdam, Rotterdam School of Management/Faculty of Business Administration, Financial Management Department/RIFM, PO Box 1738, 3000 DR Rotterdam, The Netherlands (email: bjacobsen@fbk.eur.nl). The authors wish to thank Shmuel Baruch, Geert Bekaert, Jonathan Berk, Utpal Bhattacharya, Arnoud Boot, Dennis Dannenburg, Frans DeRoon, Pieter van Hasselt, Frank de Jong, Angelien Kemna, Pieter van Oijen, Theo Nijman, Enrico Perotti, and two anonymous referees for detailed comments on earlier versions and stimulating discussions. This paper has also benefited from the comments of participants of the Western Finance Meetings in Sun Valley, Idaho (June 2000), the Annual Meeting of the European Finance Association in Helsinki, Finland (August 1999), the TMR workshop in Florence, Italy (December 1998), the Finbeldag conference in Rotterdam (November 1999) and seminars at the Copenhagen Business School in Denmark, the Catholic University in Leuven in Belgium, the University of Amsterdam, the Free University of Amsterdam, Tilburg University, Groningen University, and the Erasmus University in Rotterdam (all in The Netherlands). Moreover, we are indebted to comments made by numerous subscribers of FEN of the Social Sciences Research Network (www.ssrn.com) and participants of several Motley Fool Discussion Boards at the Motley Fool web site. We thank Global Financial Data for providing some of the data. The usual disclaimer applies. The views expressed in this paper are not necessarily shared by AEGON. 1 Some illustrative quotes: “There’s an old axiom about the market: Sell in May and go away” (Forbes, 1996, p. 310). “With all that to wait for, rarely has the old stock market adage to ‘sell in May and go away’ been more apposite” (The Economist, 1993, p. 26). “ ‘SELL in May and go away,’ says the old adage” (The Economist, 1992, p. 71). “ ‘Sell in May and go away’ is one of the best known and most often cited market wisdoms, and many generations of traders grew up hearing this wisdom” (translated from German, www.bank.de/infos/presse/technical-marketview.htm).