Investing in financial products is the emerging affluent’stop strategy to meet their financial goals, with more than half (56%) saying this,compared to 43% who rely on salary and career progression, according to a new Standard Chartered study.
The Emerging Affluent Study 2018– Climbing the Prosperity Ladder– examines the views of 11,000 emerging affluent consumers – individuals who are earning enough to save and invest – from 11 markets across Asia, Africa and the Middle East.
Tanmay Saha, Head of Retail Banking, Standard Chartered Bank, Jersey, said: “Asia, Africa and the Middle East is expected to be the largest source of wealth creation over the next five to 10 years. Understanding the emerging affluent in these regions can help financial institutions in Jersey to capture opportunities and further cement the Island’s position in the financial landscape.”
Education is a key lever of upward social mobility, so the emerging affluent want to use their money to increase their family’s prosperity in the future. Saving towards their children’s education is the number one financial goal, with 16% stating this. Saving to buy an investment property comes next, with 8% describing this as their top priority.
Despite these good intentions they are currently using more basic approaches to achieve their top financial goals: savings accounts are the preferred method for 49% of those surveyed. By comparison, 29% use time deposits followed by property investment, with less than a quarter (23%) using real estate to increase their wealth.
This could explain why currently more than half (52%) of respondents feel far away from achieving their top financial goal. They recognise that a lack of financial understanding and advice may be stopping them from meeting their financial goals; 42% say they feel held back in their aspirations by their lack of financial knowledge while 35% admit that friends and family are their top source of financial advice.
The study also reveals that more than two-thirds (69%) of emerging affluent believe effective wealth management holds the key to greater social mobility, so addressing the financial knowledge and advice gap could play a crucial role in helping them to keep moving up the ladder.
“It’s exciting to see that social mobility is booming among the emerging affluent, and that they are outstripping their parents’ success in education, careers and home ownership. These aspiring consumers are determined to continue moving upwards, and know that investing can help them reach their financial goals.
“Although they are eager to invest, the emerging affluent are being held back by a lack of in-depth financial knowledge and may not be aware of all the solutions available to them. Financial institutions can play a bigger role by educating consumers and providing a wide range of wealth management products to help them take their personal financial success to the next level,” concluded Mr Saha.