People & Money 2020

Sustainability gets the green light

Hong Kong people believe that it is not enough to just screen out the bad, people want to advance their ideals.

73% of respondents in Hong Kong are interested in making investments that address the Environmental, Social, Corporate Governance (ESG)  issues they care about.

81% would be willing to switch into sustainable investments if all else remained equal. 

Spread the word

• Only 45% of respondents in Hong Kong are familiar with sustainable investing.
• But when made familiar, 71% find ESG investing appealing.
• 47% non-investors said sustainable options would encourage them to invest for the first time.

A world of myths

Lack of knowledge leads to misconceptions. Over half of Hong Kong respondents think sustainable investing translates to higher costs (72%), sacrificing returns (60%), and higher risks (59%).

They are also unaware of how sustainability is measured (72%). This is consistent across age groups, regions and investors vs. non-investors. 

The most important ESG issues

Environmental issues are the main concern, more specifically pollution and waste (58%) and climate change risk (52%).

Sustainability: The megatrend

We found that 88% of respondents are interested in investing in key megatrends. Technological advancement is most appealing (32%), followed by climate change (22%) or emerging wealth (16%).

The changing realities of retiring

The meaning of retirement is evolving and, with it, so are expectations for the future. It’s no longer an idyllic final destination, but rather a modified working state. 

People want to maintain their current lifestyle, and know they need to do more in order to do that. In fact, 60% say they would like to have extra money to full enjoy their retirement and 49% would want to be able to afford health care or long-term care. 

Worried about the future

Even though 78% of respondents in Hong Kong report they have started saving for retirement, they don’t always feel confident or prepared (vs Global Avg 63%, APAC Avg 68%)

However, people also expect to enjoy retirement life through travelling more often that they do now (45%) and taking up a new hobby (40%).

What we can do

We need to maintain the urgency to invest. The goal hasn’t changed: to protect people later in life. Though people know their retirement savings may not be their only income source in “retirement,” this can’t stop people from contributing now.

Technology gets a big thumbs up

People really see technology as an advantage when managing money. We found that more and more people in Hong Kong are reliant on it. They see access, convenience, clarity and effective management as key benefits.

But humans still get a big thumbs up, for now

When it comes to managing money, human expertise and interaction is still important: today, people in Hong Kong prefer a mix of tech and human support. But there is a shift towards technology-based preferences for the future. 

Currently, 37% of respondents are using a financial advisor (vs. APAC avg 29%)  with most using an insurance advisor (32%), retail bank advisor (23%) or private bank advisor (22%).

Those with a financial advisor are fully bought in and believe that they offer multiple benefits.

• Financial advisors can explain the risks of their individual and total portfolios (86% and 85% respectively). They also help build diversified portfolios (79%) and possess the expertise in knowing how movements can affect their investments (81%) . 
• They also help me invest in a way that is aligned with my personal values (82%) and prioritizes my life goals when planning my investments. 

On the other hand, 31% stopped using a financial advisor because they prefer to make their own financial decisions (39%), did not feel the advisor cared for them (26%), or they felt their investments were not performing well (25%). 

33% never used a financial advisor before with main barriers being expensive fees (40%), not being able to find an advisor they trust (22%) and they feel they know enough to make their own financial decisions (22%).

So, technology is a great tool for the investor and advisor. It can provide a new level of transparency and trust between advisors and their clients and help build a stronger relationship. 

Thinking forward

We asked people what would have helped them feel better about past financial decisions. They mentioned more tech solutions:

The last taboo

People in Hong Kong have complicated relationships with money. Money is something people still feel reluctant to discuss. We must help people to feel comfortable discussing their money issues by changing the narrative to be open, trusting and inclusive. It’s how we will bring financial well-being to more people. 

Cash vs. Investments

We must change perceptions to change the balance.

• Cash makes people feel secure (42%), safe (40%), and in control (38%).
• 50% of respondents view investing as risky, but 28% also view it as purposeful.
• Hong Kong people see cash as the way to preserve their wealth, and investments as the way to grow their wealth.
• Here’s what people in Hong Kong want to deploy their cash or investments for.

Its all about the mindset.

We uncovered four Money Mindsets that describe the nuanced ways Hong Kong people relate to money when they are living at edges of stress (or not) and pessimism (or optimism). 

• 39% of respondents are Dynamic. Meaning that they are confident in investing, have retirement savings, and are in good financial health with a positive outlook. 
• 24% are Dysfunctional. They tend to feel that things are dire and they are not where they need to be today. They are likely to hold debt, and don’t have enough information on investing and believe it is difficult to understand. 
• 20% are Determined. This group of people are heavily involved in their finances, are using a wide array of tools and sources of information to actively manage their investments and finances. 
• 17% are Detached. They don't think they are where they should be financially but aren't that worried. They know they should be more proactive and be more financially engaged but find little motivation to do so now.

To understand their money mindsets is to allow us to better understand their need states for financial well-being.

Removing old walls

Status quo and old financial systems are keeping new investors away. As an industry, we can work to become more in tune with society. The more obstacles we remove, the more financial futures we can build. 

¹This survey* was fielded between November 2019 and January 2020, with 1,049 respondents in Hong Kong. We note throughout where the COVID-19 crisis has exacerbated the trends or reinforced the insights into people’s relationship with money.