About the Report:
In this week's article, we are sharing the insights from the recently released investor survey by DSP BlackRock. BlackRock conducted the annual survey of 31,139 people this time across 20 markets, in conjunction with Cicero Group, a research agency. India has been included in the survey since 2014 and this year, it was conducted online among 1,500 respondents aged 25-74, who had a role in financial decision making.
Key Findings (India Specific):
Investor Sentiments:
Despite global economic uncertainties, financial sentiment among Indians (84%) is the most positive of all markets surveyed (global 56%).
The confidence of financial decision making (savings & investments) is also very high in India (82%) compared globally (53%).
High cost of living and healthcare costs are prevalent concerns, prompting Indians to make ‘saving money’, ‘growing their wealth’ and ‘long-term healthcare’ some of their top financial priorities.
Most respondents feel that issues such as India’s economic performance, job market and economic reforms have either improved or remained consistent over the past year.
Indian stock market performance, infrastructure development and the government’s economic and development reforms inspire the highest confidence levels, while affordability of real estate is a concern.
Indians associate financial independence to earning own income and never having to ask money from others.
Asset Allocation & Investment Trends:
India has among the highest incidences of savings (97%) and investments (85%) among all global markets surveyed (83% & 53% respectively).
Respondents acknowledge that they are over-exposed to cash (22% of total holdings) and deposits (24%) and believe that they should lower their allocation (to 18% each) in these asset classes.
Respondents acknowledge that equity mutual funds (6%) and debt mutual funds (3%) have a lower exposure which needs to be increased in their total portfolio (to 8% & 5% respectively).
Physical assets such as property and gold are still popular among investors.
Almost half would like to increase their exposure to stocks and equity mutual funds over the next 12 months
Indian respondents appreciate the growth potential and value creation from equities including mutual funds, however, they still like the perceived assurance from traditional asset classes.
Indians are looking to reduce their exposure to idle cash and invest their money in other asset classes. Better knowledge about investing would encourage 41% of respondents to move more of their cash into investments. Guaranteen returns is however a greater motivator with 47% of respondents willing to move cash into investments in response to this factor.
Investment habits & decision making:
- Over 80% of Indian respondents feel that they take financial planning seriously and that having a financial plan gives them peace of mind.
- Family plays a major role for Indian respondents in their investment decision making. When it comes to long-term savings and investments, family and friends (49%), banks (46%), online sources (43%) and financial advisors (34%) are the most common sources of information.
- Retirement (50%), children’s education (46%) and buying a home (33%) are the top three investment goals for Indian respondents.
- 61% of household financial decision-making is made independently by a single member of the family. When the responsibilities are shared for remaining 39% of times, it is mostly shared with the spouse - for nearly 80% of the time.
- When household financial decision-making responsibilities are shared, only 31% of women respondents are likely to make the final decision compared to 60% of men.
- Around 60% of male respondents feel that their spouse knows as much or more than them when it comes to their investments while the corresponding figure for women respondents is over 90%.
Relationship with financial advisor:
- When asked who is the first person to come to mind when hearing the words 'financial advisor, the top two responses included 'family' (38%) and 'IFAs' (25%) followed by CA (10%). For men respondents, IFAs had the higher mind share (30%) closely followed by family (29%). For women resondents though, family (48%) had the highest mind share followed by IFAs at (20%).
- 58% of Indian respondents are using financial advice, with a higher percentage of women (65%) taking financial advice as compared to men (52%).
- 77% of advised Indians use a financial advisor for most or all financial decisions, with a higher percentage of women (79%) again as compared to men (75%).
- Nearly all advised respondents where found to be satisfied with their financial advisors.
- 83% of advised Indians pay a fee for financial advice, and 88% of those advised believe they are getting excellent or good value for their money.
- Of those who do not pay a fee for financial advice, a majority (78%) would still retain their financial advisor if they started charging a fee.
- Seeking new investment ideas and minimizing risk while investing are the most discussed topics with financial advisors.
- Women place highest value on the ability of a financial advisor to explain financial matters in a manner that they understand. Men place highest value on the ability of financial advisor to minimise risk when investing followed by the ability to protect savings /investments from inflation.
Retirement:
- Most Indian respondents recognize the need to plan for retirement and are investing specifically for it (80%).
- While Indian respondents feel confident that they will achieve their desired annual retirement income (88%), they still express concern (71%) that they won’t be able to live comfortably post retirement.
- Most Indian respondents who are saving for retirement, mentioned ‘high cost of living’, ‘child’s education’ followed by unplanned expenses as key factors making it difficult to save for retirement.
- Those respondents who haven’t started saving for retirement mentioned ‘other priorities’ and ‘not earning enough money’ as reasons why they haven’t started yet.
- Indian respondents seemed to significantly underestimate the corpus they would need for a comfortable retirement
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