Younger head honchos yet to set their financial goals

The survey found that for most people, adequate wealth means having enough to maintain their current lifestyle even at retirement, ensuring that the family is provided for, and having a stable flow of income.
The survey found that for most people, adequate wealth means having enough to maintain their current lifestyle even at retirement, ensuring that the family is provided for, and having a stable flow of income.ST PHOTO: JAMIE KOH

Poll finds they may not know how to do it or think they have lots of time for it later

Top executives in Singapore, especially those younger than 50, have not been disciplined in setting financial goals. A poll of 103 head honchos has found that 57 per cent of them have not set financial goals.

It appears that younger respondents are less disciplined in setting financial goals, possibly because they are not sure how to go about it, and believe they have plenty of time to tackle this later.

The findings came in the second annual survey commissioned by Citibank.

The BT-Citibank Wealth Survey polled 103 top managers such as chairmen, chief executive officers and managing directors. Most are aged 40 and over, and married with children. The research was conducted online by Singapore Press Holdings in July and August.

The survey indicated that financial institutions have an important role to play, not only in providing financial information but also in helping them in goal setting and reviewing their investment portfolios.

According to the survey, top executives also believe it is better in the long run to teach the young how to "fish" rather than to simply hand them food for a lifetime.

The old saying sums it up: "Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime."

BUILDING A FOUNDATION

Besides leaving their wealth for their future generations, investors both young and old believe that it's even more beneficial to empower them to build a foundation of wealth management knowledge necessary to prepare them well for the future.''

MS CHAN SAN-SAN, head of wealth management and segments, Citibank Singapore.

Eighty-two per cent of survey respondents believe educating the next generation on wealth management and that financial planning is more essential than just setting aside enough wealth for them.

For most people, adequate wealth means having enough to maintain their current lifestyle even at retirement, ensuring that the family is well protected and provided for, and having a stable flow of income through various market conditions.

The Government is making a similar push to encourage Singaporeans to make lifelong learning a way of life. Much the same principle applies to understanding the value of investing, said Ms Chan San-San, head of wealth management and segments, Citibank Singapore.

"Besides leaving their wealth for their future generations, investors both young and old believe that it's even more beneficial to empower them to build a foundation of wealth management knowledge necessary to prepare them well for the future," she said.

In terms of financial priorities, 67 per cent of respondents ranked retirement first, followed by children's education and medical bills. Six in 10 of those polled agree that retirement should focus primarily on passive income.

Ms Chan believes that being able to enjoy one's retirement while maintaining the same lifestyle is the ambition of every individual. Those with greater aspirations would also want to ensure that their loved ones are well taken care of, in addition to themselves.

"Such ambitions and aspirations are not impossible to achieve, and can become a reality with good financial planning. The key is to get the priorities right and to stay focused in building up one's nest egg so that it is sufficient to meet both existing and unexpected needs," she said.

"At Citibank, its Total Wealth Advisor, an interactive tool, enables customers to plan, monitor and manage all their investments in one place," Ms Chan added.

The survey showed that there is room for improvement in the area of financial products' know-how.

For instance, a staggering 74 per cent of respondents have not engaged in portfolio financing. This is a facility that allows you to borrow against your existing pledged assets to invest in investment products.

Portfolio financing can be structured as a time loan on a floating rate basis in a range of currencies or as a line of credit.

Half of those polled are aware of loan switching but only one in 10 expressed an interest to learn more. This could be attributed to a lack of product knowledge, with 41 per cent saying they are unfamiliar with this facility.

Loan switching lets customers convert an existing loan into a different currency with the objective of reducing the overall loan value and/or interest rates.

According to the survey, eight in 10 owned up to seven investment products at the same time. Four in 10 respondents have invested in foreign currencies, partly for returns and also because of their exposure through stocks and property purchases. High risk and the lack of understanding are key obstacles to investing in forex.

Half of them believe it is ideal to evaluate an investment portfolio once every six months.

The respondents were asked about wealth succession planning. High on their list of priorities were: upgrading their knowledge on writing a will, setting up a Lasting Power of Attorney, estate planning and succession planning.

As for where they get their key information on investment products, they cited newspapers, magazines, financial institutions and old-fashioned word-of-mouth.

Not surprisingly, the survey indicated that younger investors tend to turn to financial institutions' websites more than their older counterparts when making investment decisions. It is important to reach this audience digitally, which explains why banks are aggressively tapping the digital space.

"Customers can access our online investment platforms such as eFX and Citibank Brokerage, to transact and monitor investments conveniently via Citibank Online or Citi Mobile app," Ms Chan said.

A version of this article appeared in the print edition of The Sunday Times on October 22, 2017, with the headline 'Younger head honchos yet to set their financial goals'. Print Edition | Subscribe