The Covid-19 pandemic has prompted people in Hong Kong and Singapore to save more and worry more about retirement, according to a survey published over a year after Asia first implemented social distancing in response to it.
The survey, by St. James’s Place Wealth Management Asia (SJP Asia), found that almost half (45%) of respondents are not comfortable with their current saving and just over half (51%) say they have increased their monthly savings since the onset of Covid-19. The main barriers preventing consumers from saving more are high living costs (44%) and a lack of discipline with money (35%).
And 63% say the pandemic has made them much more concerned about planning for retirement. Most concerningly, over half (53%) have had to draw down on or reduce contributions to their retirement savings since the start of Covid-19, with 17% having to do so in a significant way.
Over half (54%) say they are not on track to have enough saved for the lifestyle they want to live in retirement. Respondents from Hong Kong specifically also believe they will have to retire later, with 48% saying that the ideal retirement age is 60 to 69, a significant increase from 2020 when the ideal retirement age was stated as 50 to 59.
As the Covid-19 pandemic shifts expectations of work and income stability, 76% say that it is a priority for them to grow additional income streams in the future.
“The impact of the global pandemic on exacerbating financial issues cannot be ignored,” says Oliver Wickham, head of business, SJP Hong Kong and Shanghai. “More Hong Kongers today are struggling in meeting their retirement goals and are borrowing from their future to pay for their living costs.
With the global economic uncertainty brought about by the pandemic, over two-thirds (68%) of respondents say they are now more cautious with their money. However, a “flight to safety” and withdrawing from investments towards more cash-based holdings may be the wrong long-term approach for generating value. Many investors recognise this in terms of asset allocation, and have actually increased their investments in equities (49%), exchange-traded funds (46%) and managed funds (40%).
There has also been a significant shift in investment attitudes since the start of the pandemic. About 38% of respondents intend to increase diversification in their portfolio (from 35% in 2020), while 32% have decreased their exposure to risk (from 28% in 2020) as they look for perceived safer investment options.
Positively, Covid-19 has raised the awareness of environmental, societal and governance (ESG) issues among investors, with 65% saying that the pandemic has increased their motivation to invest responsibly.
“With investors generally understanding the need to be more cautious and diversified thanks to Covid-19, there is an opportunity for many to adopt a more traditional investment approach that prioritises long-term fundamentals,” comments Gary Harvey, CEO, SJP Singapore. “An equally important part of this will be how they approach ESG issues and invest responsibly, which has grown in prominence over the past year.”
Family (63%) remains the top source of financial advice for many respondents, but this is closely followed by independent financial advisers (39%) and friends (38%).
Over seven in ten (72%) respondents highlight a need for more financial advice, less than half (47%) are currently engaging a financial adviser.
In spite of the many restrictions on physical meetings and gatherings, face-to-face communication is still highly sought after by respondents, with 70% saying this was important to them when engaging financial advice, highlighting investors’ needs for consistent engagement and re-evaluation of their financial situations amid a period of high uncertainty.