Standard Chartered Wealth expectancy report - 2019
TLDR: Standard Chartered Wealth expectancy report - 2019 - findings on Indian market
There is a growing trend by banks to come up with wealth reports and a not so subtle way to remind us that we should be buying more of their products to achieve our financials goals. Credit Suisse has been doing a report for several decades now. I had posted a quick take of the 2019 report here.
Standard Chartered takes a different take on the wealth report more tailored towards retirement and expectations around retirement age focused on Asia, hence the name wealth expectancy report. The full report can be downloaded here.
The Premise
The report focuses on upwardly mobile class in the following countries
China, Hong Kong, India, Kenya, Malaysia, Pakistan, Singapore,
South Korea, Taiwan and the UAE
The groups in these categories are broadly divided into 3 categories based on monthly income or AUM (Assets under management)
Emerging Affluent
Affluent
High Net worth Individuals (HNWI)
The monthly income of each group across countries is defined here. Even the so called emerging affluent are those who make more than 1 Lakh a month. To get a view of typical salaries in India, look at the kelly report here.
Each of the countries have a range of income to put them into these target brackets. I am assuming it is based on PPP (Purchasing Power Parity) terms to a common target across these countries.
The peak earnings of individuals is assumed at the age of 60, makes logical sense as it is generally right at the time of retirement for most individuals when your earnings and more importantly assets are at its maximum.
India Review
The wealth expectation of the three classes and the average is shown in this chart.
It is a rough multiple between classes
Emerging Affluent * 1.5 = Affluent
Affluent * 3 = HNWI
The chart above shows the mis-alignment between the aspiration vs. the current income. The surprising fact is both emerging affluent and the HNWI aspire to be significantly more wealthy than their current income affords them.
Financial goals
Children’s education ranks as the number on priority. I am surprised by the second item on establishing or funding business. Maybe there are more late stage entrepreneur wanna-be’s than I thought.
Retirement planning and supporting family shares the joint third spot. Given India’s poor pension and social welfare programs it is no surprise that the parents rely on the kids for their retirement and the cycle is expected to continue.
Financial products
Using savings / FD as the primary source of investing is still the norm, followed by property investments. This trend is slowly moving towards more financial products but there is still a lot more ground to cover when compared to developed economies.
Of all the chart presented for India, this one is the most concerning. Based on the wealth aspirations and the target, the wealth of the the three classes will not last long in retirement
Against an assumed 23 year retirement period, the affluent class seem to be the most prepared. But they seem to run out of money in 5-9 years which is a big concern.
I have a few reservations on their methodology here and the way the report has looked at the financials for the Indian market.
Conclusion
Retirement planning is still an afterthought for most Indian as per survey and there is a serious disconnect between the expectations and reality. Given the lack of social security and reliable public healthcare in India, the problem is aggravated further.
There also needs to a move away from savings account and real estate as the primary source of assets and wealth to other financial instruments to beat inflation and have a successful retirement.
Happy Investing.
