Savers in Hong Kong and Singapore are increasingly understanding the need to get a grip on their finances, as the pandemic highlighted the value of protection and forward planning.
A study by St James’s Place Wealth Management Asia (SJP Asia) revealed that 47% of people in the special administrative region and the Lion City do not have a financial plan in place, and over a third (36%) are not comfortable with the level of savings they currently have.
The biggest worry among savers (61%) is the cost of living. But as business costs grow – including planned tax hikes and rising energy and commodity prices – only 41% said they take inflation into consideration in their financial plans and the impact it could have on their savings.
These concerns are also reflected in Hong Kongers and Singaporeans’ investments habits, with equities being the most popular asset – 49% would allocate more – as it is seen as the only holding that can hedge affectively against inflation.
Cash is losing interest. It has proven to be the most disappointing investment, with 42% of those surveyed reporting being indifferent or not happy with its performance.
Gary Harvey, chief executive of SJP Singapore, said: “After a prolonged period of living with covid-19, there are still significant populations that are unprepared financially, mentally and emotionally to deal with the long-term pandemic, with its impact reaching far into their future wellbeing.
“Higher living costs and inflationary pressures also add to the complexity for many in managing their finances well post-pandemic. More financial education is required to address this wealth imbalance and ensure that no one gets left behind.”
Greater awareness of value of advice
Reassuringly, however, the vast majority of people in the region (79%) would turn to a financial adviser before making any decision with their finances, as 69% reported being significantly more cautious with their money post-pandemic.
Even though family and friends remain the top source for advice, 39% would speak to an adviser first, as nearly half (47%) believe they would have had a larger return on their holdings in the last five years if they had engaged with a professional.
When looking for an adviser, honesty is the most important factor for savers in Hong Kong and Singapore (49%). Considerations about fees follows suit with 30%, up from 20% in 2020. In contrast, the main reason for not seeking advice is the belief that savers can manage their own investments (55% in Singapore), and that fees are too expensive (55% in Hong Kong).
More than half (54%) are yet to discuss their retirement plans with family members; but the pandemic, in a way, has helped raise awareness around the need for protection.
Currently, 86% of respondents have a life insurance policy in place, and 27% have a Will.
The main two areas to address with professional advice are investments (87%) and retirement planning (73%) and, of those that have already engaged with an adviser, 88% found it useful.
Oliver Wickham, head of business at SJP Hong Kong and Shanghai, said: “The trend of more investors seeking qualified, professional advice to manage their money is encouraging.
“The wealth management industry has done much to help individuals plan and stabilise wealth portfolios throughout the pandemic and through economic volatility and it is reassuring to see sound financial advice being valued highly by individuals who want to protect their future.
“Establishing trust and helping clients to understand their concerns around fees, investing and financial planning is highly important.
“While there is no one-size-fits-all approach when it comes to creating investment portfolios, it is imperative that we continue to adopt practices that adds value and helps individuals to meet their financial objectives, while collectively raising industry standards.”