Confidence gap holding back affluent in Kenya from meeting their goals

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  • New survey reveals that 96 per cent of the affluent in Kenya have set new life goals post-pandemic, but many are not taking the actions needed to reach them
  • Saving in cash will not cover longer lifespans and new priorities

Standard Chartered’s latest survey into affluent (comprising emerging affluent, affluent and high net worth) consumers in 12 markets across Asia, Africa, the Middle East and UK, revealed that in Kenya 96 per cent of them have reset their life goals following the pandemic. At the same time, for 59 per cent of respondents, COVID-19 has diminished their confidence in their finances, preventing them from taking the actions necessary to achieve their new goals.

COVID-19 has prompted the affluent in Kenya to become more future-focused when resetting their priorities: more than half have set the goal to ‘to improve my health’ (57 per cent) and to ‘to set aside more for my children’s future’ (57 per cent).

To meet these new goals, the affluent need new strategies to grow their wealth, which often involves more proactive investment rather than just saving cash. 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 ‘confidence gap’ is greater among the emerging affluent

The emerging affluent have disproportionately suffered a loss of confidence, with 61 per cent reporting less confidence compared with 24 per cent of HNW individuals. That means those lower down the wealth spectrum, still establishing their finances, stand to lose out more if they do not have the support to rebuild their confidence.

For the affluent across the wealth spectrum in Kenya, the three most common factors impacting their confidence were ‘volatility in financial markets’ (38 per cent), ‘fear of poor returns on investments’ (37 per cent) and ‘insufficient information about specific investment opportunities’ (32 percent).

 

Retirement is at risk

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. In Kenya, 17 per cent of people do not currently save/invest for retirement. For those that do, ‘investment income’ (62 per cent) and ‘cash savings’ (38 per cent) are the most common expected sources of 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. This shows a disconnect between current actions and future expectations, if a confidence gap is holding them back from investing.

A pro-active approach can help the affluent regain control

Globally, almost all (94 per cent) of investors who had tried more than five new investments or investment strategies reported being happy with their finances. Whether it is diversifying into new asset classes, new investment strategies to rebalance their portfolios, or exploring sustainable investing, the survey revealed that more hands-on investors are happier with their finances.

This trend is mirrored in Kenya, where 95 per cent of those who have made five or more changes to their portfolios following the pandemic are happier with their finances.

Paul Njoki, Head of Wealth Management, Standard Chartered, said: “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 take charge of their finances and build diversified investment portfolios to meet their new goals, including a comfortable and timely retirement. If they do not act now, they may stand to miss out.”

He added: “Affluent consumers across the wealth spectrum can benefit from professional advice to help them manage their finances. We hope this report raises awareness to the risks posed by the confidence gap and are committed to help by offering personalised advice and convenient digital access to the wealth management solutions most suited to their goals.”

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