NEW DELHI :Standard Chartered’s latest survey into affluent (comprising emerging affluent, affluent and high net-worth) consumers in 12 markets across Asia, Africa, West Asia and UK, revealed that in India, 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.
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 people have set the goal ‘to improve their health’ followed by 39% of people setting the goal ‘to be financially prepared for major life changes (having a child/moving abroad)’ and 37% ‘to set aside more for children’s future (education or financial support)’.
To meet these new goals, the affluent need new strategies to grow their wealth, which often involves more proactive investment rather than just saving cash. However, their current ‘confidence gap’ has made many increasingly averse to risk, potentially stopping them from putting their money to work through investing or making use of digital tools that simplify wealth management.
The confidence gap: The emerging affluent have disproportionately suffered a loss of confidence, with half (50%) reporting less confidence compared with 41% of high net-worth (HNW) individuals. 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.
According to the survey, 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 who are not yet retired have not started saving for retirement, 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 shows a disconnect between current actions and future expectations, if a confidence gap is holding them back from investing, as per the survey.
A pro-active approach: 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. 27% of investors asked said they ‘pursued new strategies to make the most of the stock market (e.g. short-term trading)’, followed by ‘invested in private markets (e.g. private equity, private debt)’ (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, as per the survey.
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