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Sun 9 Feb 2020 10:39 AM

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Increasing wealth expectancy in the UAE

The UAE's wealth creators show a tendency to focus financial decisions on the here-and-now, Sonny Zulu, Head of Retail Banking, Standard Chartered Bank, UAE, tells us in this Q&A

Increasing wealth expectancy in the UAE

Sonny Zulu, Head of Retail Banking, Standard Chartered Bank, UAE.

Although the UAE statistics are more promising than other countries, it still shows a significant gap between what they aspire to and what they will actually achieve. What are they doing wrong?

Inherently, many people believe that putting aside money regularly will help them reach the magic number. Sadly, when they do the math as they near retirement, their savings might not add up and by then it’s often too late. They could live another 30 years post-retirement and not have enough to sustain the lifestyles they expect. Across fast-growing economies, such as the UAE, people are improving their lives and growing in affluence, but their version of success far outstrips that of previous generations. Unfortunately, not everyone has the information they need to make their money work harder and generate good returns.

Which countries in the study are doing the best job of closing the wealth expectancy gap? China? Malaysia? And why?

China actually stands out. The wealth expectancy gap is at its smallest in China where 4 in 10 wealth creators (44 per cent) are on track to meet, or come close to, their wealth aspiration. While this is partly driven by a relatively high level of statutory pensions, China’s wealth creators also put 48 per cent of their monthly income into savings – the highest of any market in our study.

The UAE has one of the lowest wealth expectancy gaps in the study, driven by high statutory pensions. The UAE’s wealth creators show a tendency to focus financial decisions on the here-and-now, though they value financial security more than any other financial goal.

When measuring what financial products the UAE wealthy use (savings accounts vs. property investments vs. time/fixed deposits), why are stock investments not included?

The financial products the UAE’s wealth creators favour to achieve their goals combine simple savings products with property investment. The UAE’s wealth creators regard financial security as critical to quality of life and happiness, but also tend to focus on living in the here and now. The immediacy of the UAE’s wealth creators’ outlook translates to their investment preferences too. More than half (56 per cent) of the UAE’s emerging affluent group would be willing to take on more risk to secure higher returns by investing in additional products.

What was most interesting about the findings of this study?

The most interest findings of our study is that 58 per cent of wealth creators say managing their money digitally has helped them achieve a better quality of life. Digital could be the key to empowering individuals of all ages to take control of their investments. 61 per cent of wealth creators believe being able to manage their investment products online has given them the confidence to invest in products that they would not have considered previously.

Has Standard Chartered conducted this study before? If so, how have the findings changed or not changed?

The Standard Chartered Wealth Expectancy Report for 2019 is a first-of-its-kind for the bank. It examines the saving behaviours and aspirations of 10,000 wealth creators across Asia, Africa and the Middle East, to compare their aspirations for retirement with the wealth they can expect to accumulate by the time they are 60. Our research reveals a significant wealth expectancy gap in all 10 markets we studied, with wealth aspiration far outstripping current wealth expectancy.

If the average wealth expectancy in the UAE is Dh864,000, what is the average total wealth aspiration amount?

According to our study, the average total wealth aspiration amount is USD11,390 a month, which is almost equivalent to the average current income (USD11,583). This means that a Dh864,000 wealth expectancy will give them USD6,639 per month during retirement – less than their wealth aspiration or current average income.

How many years of retirement should people be planning for from age 60?

Average life expectancy at peak wealth (age 60) is 23 years for the UAE’s wealth creators. However, our study finds that current wealth expectancy will only fund an average of 11-13 years of the retirement lifestyle that wealth creators aspire to. This indicates that there exists a decade-long gap of wealth investment to meet UAE wealth creators’ aspirations. 

Sonny Zulu, Head of Retail Banking, Standard Chartered Bank, UAE

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