Economy

Pandemic shakes financial confidence of the affluent

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Summary

  • Six in every 10 affluent Kenyans are less confident of their finances after the pandemic, a new survey has shown.
  • The Standard Chartered Wealth Expectancy Report shows that more than half of the rich, 59 per cent, feel that the pandemic has made them less confident about their finances, whereas 29 per cent feel that the pandemic has made them more confident.

Six in every 10 affluent Kenyans are less confident of their finances after the pandemic, a new survey has shown.

The Standard Chartered Wealth Expectancy Report shows that more than half of the rich, 59 per cent, feel that the pandemic has made them less confident about their finances, whereas 29 per cent feel that the pandemic has made them more confident.

The three most common factors impacting the affluent confidence were volatility in financial markets at 38 per cent, fear of poor returns on investments at 37 per cent and insufficient information about specific investment opportunities at 32 per cent.

The report indicated that 17 per cent of Kenyans do not currently save or invest for retirement.

“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 build diversified investment portfolios to meet their new goals, including a comfortable and timely retirement,” Paul Njoki, head of wealth management, Standard Chartered.

The survey released on Monday found that 96 per cent of its consumers have set new life goals post-pandemic.

It adds that Covid-19 has prompted the affluent in Kenya to become more future-focused when resetting their priorities.

The data showed that 57 per cent of the respondents have set the goal to improve their health and to set aside more for their children’s future.

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 online survey was conducted in 12 markets across Asia, Africa, the Middle East and UK, with 1,598 surveyed from Kenya.

The survey showed that the emerging affluent have disproportionately suffered a loss of confidence, with 61 per cent reporting less confidence compared to 24 per cent of high net worth individuals.

That means those lower down the wealth spectrum, stand to lose out more if they do not have the support to rebuild their confidence.

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.

For those that invest, 62 per cent rely on investment income and 32 per cent on cash savings for income.

At the same time, 45 per cent plan to retire before the age of 65 and 22 per cent have set a new goal to retire early.