In India, almost 94% have reset their life goals following the pandemic. At the same time, for 48% of the respondents, COVID-19 has diminished their confidence in their finances, preventing them from taking the actions necessary to achieve their new goals, according to the findings of a survey conducted by Standard Chartered Bank (StanChart). The survey covered the emerging affluent, affluent and high net worth (HNI) consumers in 12 markets across Asia, Africa, the Middle East and UK.
As per the Wealth Expectancy Report 2021, COVID-19 has prompted the affluent in India to become more future-focused when resetting their priorities. Nearly a half (42%) of the people have set the goal 'to improve their health', followed by 39% of the people setting the goal 'to be financially prepared for major life changes, like having a child or moving abroad' and 37% 'to set aside more for children's future such as education or financial support'.
According to Nakul Jain, managing director (MD) for affluent clients and deposits at StanChart India, the recent pandemic has upended the sense of security for people, not just related to physical well-being but financial well-being as well. "The affluent are reassessing their priorities, and we hope this report raises awareness of some of the behavioural changes that affluent investors need to be aware of and the necessary actions to be taken. There is a clear need to have a focused proactive investment strategy while balancing risk," he says.
'Confidence Gap' Is Greater for the Emerging Affluent
As per the survey, the emerging affluent have disproportionately suffered a loss of confidence, with half (50%) reporting less confidence compared with 41% of HNIs. "That means those lower down the wealth spectrum, still establishing their finances, stand to lose out more if they do not have the support to rebuild their confidence," it says.
For the affluent across the wealth spectrum in India, the three most common barriers to pursuing their financial goals were 'volatility in financial markets' (30%), 'insufficient information about specific investment opportunities' (28%) and 'the practical difficulties in shifting investment strategies' (28%).
Retirement Is at Risk
A late start to retirement planning, combined with the pandemic-induced confidence gap, leaves a significant proportion of affluent consumers at risk of a shortfall for their retirement.
The survey found that 33% of respondents have not yet retired or have not started saving for retirement, and yet 43% of the affluent in India anticipate depending on investment income in retirement. At the same time, 54% plan to retire before the age of 65 and in the last 18 months, 20% have set a new financial goal of retiring early.
This, StanChart says, shows a disconnect between current actions and future expectations, if a confidence gap is holding them back from investing.
A Pro-Active Approach Can Help the Affluent Regain Control
As per the survey, globally, almost all (94%) of investors who had tried more than five new investments or investment strategies, reported being happy with their finances. Whether it is diversifying into new asset classes, new investment strategies to rebalance their portfolios, or exploring sustainable investing, the survey revealed that more hands-on investors are happier with their finances.
Almost 27% of investors say they 'pursued new strategies to make the most of the stock market like short-term trading, followed by 'invested in private markets such as private equity and private debt' at 27%.
In India, almost all (99%) of those who have taken five or more actions related to their finances in the last year are happy with their investment portfolio, the survey says.
"The report reveals that nearly half of the respondents feel less confident about their finances despite having taken some action related to it in the last year," says Samrat Khosla, MD and head of wealth at StanChart, adding, "Professional assistance can help consumers address this lack of confidence."
On behalf of StanChart, Portland Communications conducted a 20-minute online survey of 15,649 emerging affluent, affluent, and HNW respondents across 12 markets between 30 June and 26 July 2021. The samples per market were: Hong Kong (1,076), India (1,501), Indonesia (1,523), Kenya (1,598), Mainland China (1,505), Malaysia (1,037), Pakistan (1,556), Singapore (1,056), South Korea (1,082), Taiwan (1,041), UAE (1,053), and the UK (1,621).