Friday 3 December 2021
 
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ANALYSIS

Dr Owen Young

Pandemic triggers change in life goals in UAE: StanChart

DUBAI, 18 days ago

Eighty-eight per cent of respondents to a survey in the UAE have reset their life goals following the Covid-19 pandemic, according to Standard Chartered’s (StanChart) latest survey into affluent consumers in 12 markets across Asia, Africa, the Middle East and the UK.

 At the same time, for 43 per cent of the respondents, Covid-19 has diminished their confidence in their finances, preventing them from taking the actions necessary to achieve their new goals.

Dr Owen Young, Regional Head of Wealth Management, Europe, Middle East and Africa, Standard Chartered Bank, said: “The global pandemic impacted both the investment perception and risk profiles of UAE affluents. It prompted them to reset their financial priorities and encouraged them to seek new financial products, which increased their rate of savings for the future while being more engaged in tracking their financial performance.”  

Covid-19 has prompted the affluent in the UAE to become more future-focused when resetting their priorities: Over a third (47%) of people have set the goal to improve their health, followed by 39% of people setting the goal of setting aside more for their 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.

Dr Owen added: “The UAE affluents have become more risk averse and are actively adapting their finances to the global economic situation with eyes on global market volatility and interest rate levels. A sizable percentage of the affluent sample in the UAE expect future returns to drop and are aligning their portfolios to this new normal. We, at Standard Chartered, acknowledge this trend and are working closely with our clients to grow, manage and most importantly protect their money.”

The ‘confidence gap’ is greater for the emerging affluent

The emerging affluent have disproportionately suffered a loss of confidence, with almost half (46 per cent) reporting less confidence compared with 30 per cent 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.

For the affluent across the wealth spectrum in the UAE, the three most common factors impacting their  confidence were volatility in financial markets’ (35 per cent), ‘fear of poor returns on investments’ (30 per cent) and ‘the complexity of developing an investment strategy’ (26 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. The survey found that 31 per cent of people do not currently save/invest for retirement. For those that do, ‘investment income’ (50 per cent) and ‘cash savings / deposits’ (37 per cent) are the most common expected sources of income in retirement.

At the same time, 53 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 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 per cent) of those who have made five or more changes to their portfolios following the pandemic are happy with their finances. – TradeArabia News Service




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