About 88 percent of the affluent people in the UAE have reset their life goals following the Corona pandemic, and 43 percent of them feel the pandemic has made them less confident to utilize their finances for achieving goals, a Standard Chartered survey has found.
The bank surveyed affluent, emerging affluent, and high net worth consumers in 12 markets across Asia, Africa, the Middle East and the UK.
COVID-19 has prompted the affluent in the UAE to become more future-focused when resetting their priorities: over a third (47 percent ) want to improve their health and 39 percent of people want to set aside more for their children’s 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 survey said.
The ‘confidence gap’ is greater for the emerging affluent
The emerging affluent have disproportionately suffered a loss of confidence, with almost half (46 percent) reporting less confidence compared with 30 percent of high net worth (HNW) individuals.
Those lower down the wealth spectrum, still establishing their finances, therefore, stand to lose out more if they do not have the support to rebuild their confidence.
For the affluent across the wealth spectrum in the UAE, the three most common factors impacting their confidence were volatility in financial markets (35 percent), fear of poor returns on investments (30 percent) and the complexity of developing an investment strategy (26 percent).
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 31 percent of people do not currently save/invest for retirement.
For those that do, ‘investment income’ (50 percent) and ‘cash savings/deposits’ (37 percent) are the most common expected sources of income in retirement. At the same time, 53 percent plan to retire before the age of 65 and in the last 18 months, 19 percent 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 pro-active 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 the UAE where almost all (94 percent) of those who have made five or more changes to their portfolios following the pandemic are happy with their finances.