Asian affluent need 12% annual return to achieve wealth goals
The FuturePriority Report captures the sentiment of over 2,700 Asian affluent individuals across nine markets shows that affluent Asians remain confident in growing their wealth.
- On average, Asian affluent seek USD4m in 10 years
- Wealth is created through a balance of investing and managing debt
- To meet the expectations of the Asian affluent, three factors stand out in importance for banks - Brand Reputation, Service and Advisory Process
- Three themes will grow in importance in the future for banks – Education, Internet and Advice
The FuturePriority Report - a study conducted from October to November 2011, by Standard Chartered Bank and Scorpio Partnership which captures sentiment of over 2,700 Asian affluent individuals across nine markets - has revealed that despite a slight dip in short-term wealth confidence due to an uncertain economic landscape, affluent Asians remain confident in growing their wealth - they have an aggressive wealth target of growing their wealth to US$4 million in 10 years. This means they need an annual return of 12%.
The report also reveals that while most respondents see Asia as the region offering excellent wealth creation opportunities, in the longer term they adopt a more international perspective. The Report also reveals that Asian affluent are sophisticated wealth builders, adopting a dual-prong approach of investing, and using credit or leverage to enhance their returns.
Confident and ambitious in Asia
Wealth confidence is a defining characteristic of the affluent and a strong majority of Asia’s affluent (77%) remain confident in growing their wealth in the next 12 months, although the confidence level is slightly lower than that of the previous year (81%). Of the nine countries surveyed, India and Indonesia stand out as being the most confident (88% and 98% respectively), while Singapore, Hong Kong and Taiwan share similar levels of wealth confidence at 70%, 68% and 67% respectively.
When asked about their specific money goals, the affluent Asian is seen to be aggressive, aiming to grow their wealth by 12% per annum over the next 10 years to USD 4 million, on average. South Korea has the highest money goal (USD 6 million), followed by India (USD 4.8 million) and China (USD 4.5 million).
Increasingly sophisticated and international
Moving from if the Asian affluent think they are going to make money, the report analyses where these wealthy see the greatest wealth creation opportunities. The study reveals that while Asia is top of mind for both the short and long terms, they are also not discounting opportunities beyond their doorstep.
About a third of respondents view Europe and North America as offering good wealth creation prospects in the next 12 months. These numbers rise substantially over a five year horizon, particularly for Middle East & Africa and Latin America, showing that the Asian affluent investor takes a balanced, sophisticated and global view to wealth creation.
Wealth creation - Two sides of the coin
The Asian affluent shows a preference for tangible investment options, stating high interest savings (43%), gold (43%) and property (34%) as their top choices in the next 12 months. The Asian affluent are also fairly diversified and see themselves investing in an average of 3.3 product types in the next 12 months.
Investments however form only one half of the wealth creation equation. While the Asian affluent expects to invest in the next 12 months, they also see themselves using an average of 1.6 types of loans. These are mainly to finance personal use or large assets like property or business. Their attitudes towards borrowing reflects that while the Asian affluent is careful about the use of credit, they also view it as a wealth management tool, with one-third of respondents saying that it can help them enhance investment returns when used carefully.
Brand, Service and Advice - The hallmarks of a great customer experience
So what do Asia’s wealthy really need and want from their banks? Nearly 50% of respondents said that the ability to meet a wide range of needs is an important factor when selecting a bank. Looking at the factors that make up a great customer experience, Brand Reputation, Service and the Advisory process stand out as the most important. ‘Brand Reputation’ is the most important factor at 72%, followed by ‘Staff Efficiency’ at 66%, ‘High quality reporting and portfolio reviews’ at 59% and ‘New investment opportunities’ at 58% on a 100% scale.
Three themes have also been identified as emerging for the future – Education, the use of the Internet and Advice. Almost 90% of those surveyed expected their financial services provider to deliver education on investments and strategies to manage their wealth more effectively. In the next five years, half of those surveyed foresee they will increase their use of the internet as a support tool to make investment choices, and 44% say they expect to take more financial advice before investing.
Foo Mee Har, Global Head of Priority and International Banking, Standard Chartered Bank, said: “Customers, not banks, are driving the agenda in Asia. The Asian Affluent are clearly wealthier and more sophisticated than before. They have distinctive and more complex needs and hence cannot be treated with a ‘one size fits all’ approach. Therefore, to succeed in this important client segment, banks need to focus more on their service and quality of their advisory processes, rather on the products they sell. Assuming the role of a trusted advisor also means really listening to what the client is asking for, and treating them in a holistic manner to include their families, their business and their global ambitions.
The Standard Chartered FuturePriority survey was conducted from October to November 2011, covering China, India, South Korea, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, and Malaysia. 2,768 individuals with average USD 1.4 million assets participated in the survey.
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Notes to Editors
Standard Chartered – leading the way in Asia, Africa and the Middle East
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