Why Kenya’s affluent can’t meet their goals

Kenyan currency [File]

Nine in ten of Kenya’s affluent have reset their goals in the last two years, a new survey shows.

This is as over half of the affluent said that they have lost confidence in their finances and were withholding making steps to achieve their new goals, said the report by Standard Chartered Bank.

According to the survey, Covid-19 has triggered a need for the affluent to reset goals with health and setting aside wealth for their children’s futures topping priorities.

In an effort to meet the new goals, the affluent need to embrace new strategies to grow their wealth through proactive investments rather than saving cash advised the survey.

The current confidence gap has caused many affluent to be risk-averse hence hesitating to invest or to use digital tools that simplify wealth management.

“Saving in cash will not cover longer lifespans and new priorities, so it is essential for the affluent to invest for the long term,” said Paul Njoki, Head of Wealth Management, Standard Chartered.

“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.”

The confidence gap among the emerging affluent

61 per cent of the emerging affluent have suffered a lack of confidence. Therefore, this, means that those climbing the wealth ladder stand to lose out if they do not have a support system to build their wealth.

The most common factors that affected the confidence of the affluent in Kenya were ‘volatility in financial markets (38 per cent), ‘fear of poor returns in investments’ (37 per cent) and ‘insufficient information about specific investment opportunities (32 per cent).

Retirement is a risk

Late retirement planning during the pandemic increased the confidence gap leaving a portion of affluent consumers at risk of a deficit for their retirement. 17 per cent of Kenyans don’t save or invest for retirement. For those that do, 62 per cent of income and cash savings of 38 per cent are the most common sources of income. 45 per cent plan to retire before the age of 65 and 22 per cent have set a new goal to retire early. There is a disconnect between current actions and future expectations.

A proactive approach to help affluent regain control

Globally, 94 per cent of investors who had tried more than five investments or investment strategies were happy with their finances. More hands-on investors were impressed with positive results. 95 per cent of Kenyan investors who made five or more changes to their portfolios following the pandemic were happier with their finances. [Tony Mbaya]