Hong Kong's ultra rich have short-sighted approach to retirement: survey

Even if retirement's considered a priority.

Friends Provident International (FPI) has announced the findings of its 2015 Investor Attitudes Report, which interviewed 1,000 affluent and emerging affluent respondents in Hong Kong and Singapore to learn about their sentiment and preferences towards investments and financial security.

According to a release from Friends Provident International, the survey findings show that Hong Kong respondents see retirement as a top reason for saving or investing, which has been consistent for three consecutive years between 2013 and 2015.

Despite that, 57% of Hong Kong affluent respondents consider ‘less than five years’ as the most important timescale when thinking about savings and investments.

Here's more from Friends Provident International:

James Tan, Managing Director for Asia at Friends Provident International, said, ‘With customers at the heart of our business, FPI’s Investor Attitudes Report is our on-going flagship initiative that takes a deep-dive into understanding their retirement needs to create solutions that are catered to their demands and preferences.

Findings from our latest report indicate that Hong Kong people are most conscious about their retirement needs where the most (55%) respondents surveyed see it as a reason for saving or investing, while having insufficient fund for retirement (41%) is a key concern. This could imply the individuals’ insecurity about their financial future, and together with recent market volatilities, people may adopt a less rational and short-sighted investment window approach to reach a long-term goal.’

Survey results also show that opinions on residential property investment are split. Among affluent Hong Kong respondents, 44% believe that it is a good long-term investment and will continue to go up. Furthermore, 35% believe that it is a bad/very bad time to invest in residential property, while only 23% think it is a good/very good time. This compares to 36% of respondents last year who thought it was a good/very good time to invest. In 2014, more than half of those interviewed turned towards property investment and investment-linked products to make up for the shortfalls from the perceived insufficient retirement funding. The decline observed this year could be attributed to the rapidly grown and sky-high property prices in Hong Kong, which has now become difficult for most people to afford.

Sentiment towards risk taking is also split. 30% of the respondents agree they are more willing to take financial risks compared to others, with an almost equal proportion believing that they are less willing (29%). Equities/Shares (43%) – traditionally considered as riskier investment tools – are among those considered a good/very good time to invest in, followed closely by Money/Currency markets (31%).

‘Short-sighted investment approaches are usually associated with higher risks. With that in mind, investors should maintain a balanced and diverse portfolio, and look at investment vehicles that can even out their risks over time. Wealth management and preservation are important elements of retirement planning and they go hand-in-hand. Strategies should be well-planned and carefully crafted to include different tactics to fit the individuals’ needs and risk appetite.

Our survey shows that the majority (51%) of affluent respondents see insurance, as a means of preserving and accumulating wealth, as important now as compared to seven years ago. To ensure that they are planning for their retirement effectively, they should conduct thorough assessments of their risk tolerance with financial professionals who can evaluate their financial situation and highlight risks that may not be previously apparent to them,’ James Tan added.