At least 96 percent of emerging affluent, affluent and high net worth individuals in Kenya reset their life goals following the pandemic, a new study has revealed.
According to the study by Standard Chartered into consumers in 12 markets across Asia, Africa, the Middle East and UK, 59 percent of respondents said that COVID-19 has diminished their confidence in their finances, preventing them from taking the actions necessary to achieve their new goals.
More than half have set the goal to ‘to improve my health’ (57 percent) and to ‘to set aside more for my children’s future’ (57 percent).
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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 emerging affluent have disproportionately suffered a loss of confidence, with 61 percent reporting less confidence compared with 24 percent of high net worth 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 Kenya, the three most common factors impacting their confidence were volatility in financial markets (38 percent), fear of poor returns on investments (37 percent) and insufficient information about specific investment opportunities (32 percent).
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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 Kenya, 17 percent of people do not currently save/invest for retirement. For those that do, ‘investment income’ (62 percent) and ‘cash savings’ (38 percent) are the most common expected sources of income. At the same time, 45 percent plan to retire before the age of 65 and 22 percent have set a new goal to retire early. This shows a disconnect between current actions and future expectations if a confidence gap is holding them back from investing.
Globally, almost all (94 percent) 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.
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This trend is mirrored in Kenya, where 95 percent of those who have made five or more changes to their portfolios following the pandemic are happier with their finances.
“Saving in cash will not cover longer lifespans and new priorities, so it is essential for the affluent to invest for the long term. They need to take charge of their finances and build diversified investment portfolios to meet their new goals, including a comfortable and timely retirement. If they do not act now, they may stand to miss out,” said Paul Njoki, Head of Wealth Management, Standard Chartered.
“Affluent consumers across the wealth spectrum can benefit from professional advice to help them manage their finances. We hope this report raises awareness to the risks posed by the confidence gap and are committed to help by offering personalised advice and convenient digital access to the wealth management solutions most suited to their goals.”
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