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UBS Investor Watch Hong Kong 2016 reveals changing perceptions toward retirement

Hong Kong Media Releases APAC

First international edition of the “Investor Watch” report – UBS’s analysis of investor sentiment

Hong Kong, 12 April 2016 – High net worth individuals no longer equate retirement with old age. Instead, they view retirement as an opportunity to embark on new ventures, the most popular of which include entrepreneurship, lifelong passions and travel, according to UBS Wealth Management’s Investor Watch report “Why should I retire? Retirement is not the same as old age,” published today.

“A lot of our clients in Hong Kong are first- or second-generation entrepreneurs who are at a stage of life where they need us to help them with wealth preservation and wealth planning. In many cases, they neglect to plan ahead for their retirement, as well as for leaving a family legacy and inheritance. However, increasingly they are coming to terms with the need to implement plans early to ensure financial security,” said Amy Lo, Head of UBS Wealth Management Greater China and Head and Chief Executive of UBS Hong Kong.

While many imminent retirees expect retirement to bring new opportunities, few are financially prepared for a retirement that is likely to last significantly longer than that of their parents. Many investors have failed to provision for lifestyle preservation through asset accumulation, wealth preservation, legacy and estate planning, and succession planning. Around 68% of retired investors use financial planners to optimize their retirement plan, compared with 53% among those yet to retire. While 43% of those still working turn to professionals to determine how much to save, after retirement, only 24% ask for help in building their nest egg.

Respondents in the US, the UK, Germany, Hong Kong and Singapore now regard retirement as an opportunity to enjoy a new lease on life. As life spans increase, retirement is no longer perceived as a single period but has evolved into three distinct phases: Transition (50–60), My Time (60–80) and Golden Years (80–90+). In Hong Kong, 51% of women and 35% of men say they feel old before the retirement age of 67.

Survey results show that Hong Kong entrepreneurs view retirement differently to retirees who are not business owners; 40% see retirement as an opportunity to focus on their career, compared with 25% of Hong Kong-based employees. Contrastingly, entrepreneurs in Singapore see retirement as a time to relax, travel and enjoy the fruits of their labor.

Hong Kong entrepreneurs may also underestimate the role of health in their later years compared with retired employees. Only 7% of the city’s entrepreneurs expect to focus on health issues while it is a major focus for 21% of retirees.

Entrepreneurs’ reasons for starting a business vary by generation. Among millennials, the most common reason was profit, while Gen X entrepreneurs wanted to do something they loved and baby boomers started businesses to leave a legacy.

Men vs. women
Retirement strategies differ between men and women when it comes to running a business. Male respondents tend to save less for retirement, channeling more money into their business, while female respondents were more conscious of the risks of starting a new business. As a result, 50% of the female entrepreneurs surveyed save more for retirement than male peers.

Hong Kong’s female entrepreneurs start their business while also saving for retirement, whereas Singaporean women view future business revenues as the source of their income in retirement.

Millennials vs. Gen X
Nearly half of the millennials surveyed expect to be working at 65, while 39% of Gen X investors plan to work. While many millennials expressed a preference for forming their own retirement strategy, both millennial and Gen X investors tend to seek out financial planners for tactical advice.

“Understanding the individual needs of investors is imperative if we are to provide clients with a customized and comprehensive plan so that they and their families can have peace of mind,” Lo added.

Other key findings:

  • Retirement savings for these investors are often lumped into one pot. The common strategy of allocating more than half of retirement savings to stocks may leave investors unprepared as their needs change during the three phases of retirement. Nowhere is this more apparent than among millennial respondents – only 1% claimed to have begun to plan for retirement.
  • More than half of Hong Kong investors rely on their spouse for financial advice and 62% of investors admitted that they did not know how much to save for retirement.

Investor Watch is a quarterly publication analyzing investor sentiment and behavior, designed to provide a window into investors’ current, core, and often shifting priorities. Created in 2012, UBS Investor Watch tracks, analyzes and reports the sentiment of affluent and high net worth investors. The 2016 survey is the first to be conducted globally.

UBS Investor Watch surveys cover a variety of topics, including overall financial sentiment, economic outlook and concerns, personal goals and concerns, and key topics such as aging and retirement.

For this first international edition of UBS Investor Watch, 204 affluent, high net worth and ultra high net worth investors responded to our survey between 4 January and 14 February 2016. The 204 investors forming the core sample have at least USD 250,000 in investible assets. This UBS Investor Watch also includes a sample for younger generations: 84 millennials aged 18–35 and 73 Gen X respondents aged 36–55.

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UBS is committed to providing wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland, with superior financial advice and solutions while generating attractive and sustainable returns for shareholders. Its strategy centers on its Wealth Management and Wealth Management Americas businesses and its leading universal bank in Switzerland, complemented by its Asset Management business and its Investment Bank. These businesses share three key characteristics: they benefit from a strong competitive position in their targeted markets, are capital-efficient, and offer a superior structural growth and profitability outlook. UBS’s strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates. Capital strength is the foundation of its success.

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Media contact:
Fiona Chan         (t) +852 2971 8837             (e)