A survey of attitudes among Asian HNW individuals reveals some surprising - and perhaps more predictable - views about how they see wealth, their confidence in reaching financial goals, and willingness to consider outside guidance.

A survey of Asian high net worth individuals shows they have an average of $7 million in investible assets but many believe they need to be “deca-millionaires” to qualify for the tag of “wealthy”.

HNW individuals with an average net worth over $10 million believe that being perceived as “wealthy” requires $17 million, M&G Investments’ latest APAC Wealth Barometer Report said. Only Singaporeans identify as being “wealthy” within that bracket of $10 million, with their perceptions slightly lower at $6.2 million. Their counterparts in Hong Kong and China believe they need to double current assets to achieve the same status, the survey found.

The M&G Asia Wealth Barometer examines Asia’s main wealth management market hubs of Hong Kong and Singapore, as well as the Asian countries with the highest amount of wealth and highest number of HNW individuals in China and Indonesia. M&G commissioned Scorpio Partnership, the consultancy, to conduct the study in March 2015 and the findings are based on a sample size of over 1,000 individuals in China, Hong Kong, Indonesia and Singapore with an average worth of $6.8 million. It aims to investigate the investment aptitude and attitude of Asian HNW individuals under four main themes: knowledge, network, choices and goals.

In China and Hong Kong, a higher proportion of HNWIs (38 per cent and 34 per cent respectively) cite achieving financial security for their own and their family’s future as the true meaning of affluence. Meanwhile, Southeast Asia’s respondents tend to believe that to be given a “wealthy” label one must have disposable income.

The survey suggests that wealthy individuals in the region are still heavily inclined to take a hands-on approach to investment rather delegate to discretionary managers or other sources of advice. This publication has been told by industry practitioners that this situation is changing, albeit not rapidly. Asia has been traditionally more of a “transactional” wealth market than, say, Western Europe.

Despite the rapid rise of Asia as a location for high net worth persons, the survey found such individuals are not confident in their ability to reach their perceived standard of wealth: on average, only 49 per cent of respondents said they will hit their financial targets.

Individuals with an average net worth of more than $10 million are more confident about reaching their goals: some 60 per cent of them state they will hit their targets, compared to 40 per cent of those with an average net worth of less than $1 million.

“What we find is that the psyche of many investors in Asia is geared towards chasing higher financial returns. But they lack confidence in their ability to reach these wealth levels. Crucially, they are searching for a wealth manager who can deliver quantitative and qualitative value by blending superior investment returns alongside robust wealth planning services that can set them on track to achieve concrete goals in life,” Jeik Sohn, an Asia-based investment specialist at M&G Investments, said.

In the established financial centre of Hong Kong where aspirational numerical values are high, confidence levels are much more tempered with as few as 28 per cent of HNW individuals saying they will ever be truly “wealthy”.

While wealth managers may play a part in giving the region’s HNWIs confidence in the product, they are absent when it comes to supporting clients’ wealth planning process. By focusing on the investment piece, wealth managers have neglected to understand the qualitative aspect, specifically, what is important to clients about their wealth creation. The result is that investors are not getting the professional guidance they need to set realistic financial targets, the survey found.

Go it alone
Elsewhere, the survey found that when it comes to actually making decisions about their wealth, HNW individuas are choosing to “go it alone” rather than involving others. While four-fifths of them have engaged a wealth manager, less than a third of them actively involve their provider in their financial choices. Spouses are more included in decision-making but other family members are kept at an arm’s length.

This population group relies on qualitative benchmarks instead of a systematic, goal-based approach to assess their financial progress.

When asked about how they judge their investment success, 58 per cent of such high net worth persons in Asia cited “having enough money to live on” and a further 45 per cent stated “having sufficient wealth to cease working”. Just a quarter of these investors measure progress by the objectives they have set with their wealth manager. By using these relative and evolving targets, achieving goals always remains a distant improbability.
 
There is a difference in the optimism of these clients when it comes to making money; 62 per cent of investors who plan with their relationship manager are confident that they will become “wealthy” compared to just 51 per cent who use qualitative benchmarks.

Achieving higher returns is the top reason for Asia’s HNW persons to pay for financial advice (57 per cent). Exactly two-fifths of respondents said they would be more likely to pay for advice from a wealth manager if they have a better understanding of their financial goals.