Standard Chartered’s latest survey into affluent (comprising emerging affluent, affluent and high net worth) consumers revealed that COVID-19 has prompted the affluent in Malaysia to become more future-focused when resetting their priorities.
To meet their 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.
Confidence Gap’ is Visible Across the Emerging Affluent to the HNW
The emerging affluent in Malaysia have suffered a relatively higher loss of confidence, with more than half (54 per cent) reporting less confidence. The loss of confidence among the HNW, while relatively lower at 48 per cent, is still significant. A majority of the affluent overall in Malaysia stand to lose out if they do not have the support to rebuild their confidence.
For the affluent across the wealth spectrum in Malaysia, the three most common factors impacting their confidence were volatility in financial markets (36 per cent), fear of poor returns on investments (32 per cent) and hesitancy or uncertainty around committing to investment decisions (27 per cent).
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. In Malaysia, 28 per cent of people do not currently save/invest for retirement. For those that do, investment income (55 per cent) and cash savings/deposits (45 per cent) are the most common expected sources of income in retirement. At the same time, 50 per cent plan to retire before the age of 65 and in the last 18 months, 19 per cent have set the new financial goal of retiring earlier. This shows a disconnect between current actions and future expectations, if a confidence gap is holding them back from investing.
A Proactive Approach Can Help the Affluent Regain Control
Globally, almost all (94 per cent) 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.
This trend is mirrored in Malaysia, where a strong majority (87 per cent) of those who have made five or more changes to their portfolios following the pandemic are happy with their finances.
“When it comes to financial planning, inaction can be costly. This is evidenced by our most recent findings which demonstrate investors who have prudently explored new ways to manage their money are reaping the rewards. Whether it’s managing their finances better to save more or investing savings into diversified asset classes, investors who are more involved in the decision-making process are more comfortable with their finances,” said Sammeer Sharma, Head of Consumer, Private and Business Banking at Standard Chartered Malaysia.
He added, “The good news is that affluent investors in Malaysia appear to be headed in the right direction, with nine out of 10 investors managing their finances better. The next step is to offer them the right investment advisory along with diversified wealth solutions to help them meet their goals. At Standard Chartered, our open-architecture approach enables us to offer our clients just that; multi-source market insights and best-in-class products delivered through cutting-edge technology platforms.”