The survey reveals that more than 70 per cent of respondents believe the Covid-19 pandemic had worsened their overall health and financial well-being, as well as lowering their confidence in wealth planning and wealth management. The findings suggest that many of these affluent individuals are struggling to meet their financial goals. The responsibilities that come with belonging to this age group, which may include educational expenses for children, buying a family home and building a retirement fund – all affected by the pandemic and the current economic climate – create more challenges for people to grow their wealth.

“One of the main challenges facing the middle class is that it is increasingly difficult to afford the lifestyle they want while also securing their financial future,” says Brian Hui, head of customer propositions and marketing, wealth and personal banking at HSBC in Hong Kong. “The volatile global market also puts more pressure on affluent people, as their perceived amount of wealth necessary to achieve a middle-class lifestyle has drastically surged and their financial aspirations have risen.”

Early retirement is one of the financial goals that has changed, as recent global events have accelerated the desire among individuals to create a better work-life balance and build a retirement fund that would give them a greater degree of flexibility in choosing when to retire. The study reveals differences in these aspirations between the millennial middle class and their older peers, with over half of millennials planning to retire earlier to create a better life-work balance – compared to just 28 per cent of non-millennials.

“Although the pandemic has slowed their savings plans, millennials still intend to retire at an average age of 56, six years earlier than non-millennials, who plan to retire at the age of 62, and they are taking aggressive action to achieve this,” says Sami Abouzahr, head of investments and wealth solutions, wealth and personal banking at HSBC Hong Kong.

As the cost-of-living crisis begins to bite, parents in particular are finding it increasingly difficult to maintain a savings plan, given their new hopes for their children’s education. The survey reveals that among parents, providing a desirable education for their children is a key priority for future planning. One in three respondents indicated they are considering educating their children overseas, citing favourable education systems and exchange rates as the main drivers.

However, the cost of educating children overseas may also be difficult to absorb. The HSBC study found that an average of HK$1.53 million, or as much as HK$3.85 million, is needed to support children’s overseas education from primary school to university. In addition, some parents intend to give an average of HK$1.4 million to their children as a graduation gift, meaning they would need an education fund of about HK$5.25 million.

Despite their rising financial aspirations, global uncertainties and today’s financial landscape are making it increasingly difficult for the middle class to acquire the capital they feel is needed to secure their financial futures. “The middle class is struggling to further grow their wealth, and they are concerned about external factors like inflation,” Abouzahr says. “While many of them choose not to change their lifestyles, others choose to reduce their expenses – but that naturally means lowering their standard of living.”

Abouzahr says challenging times bring a marked decline in the middle class’ appetite for risk. The study shows the proportion of the middle class who are cautious in their investments has increased by 11 per cent compared with pre-Covid data, while more than 50 per cent of respondents hold cash in their portfolios instead of investing in assets – a 10 per cent increase.

While middle-class people in Hong Kong are now more risk-averse than before, which means fewer investments in funds and bonds, 76 per cent believe property investment may help to preserve the value of their assets. The study shows 28 per cent are considering buying property overseas within the next three years as conditions in Hong Kong price them out of the market, while according to data from the Hong Kong government’s Ratings and Valuation Department, properties in the city have increased in value by 275 per cent over the last 13 years. Hong Kong people continue to look to locations such as the UK, mainland China and Canada, where properties generally offer greater value for money.

HSBC undertook the study as part of a larger initiative to better understand the areas where middle-class customers may need help to financially plan for the future and achieve their long-term goals. The study has helped the bank tailor its services to this crucial demographic, such as upgrading its Premier offerings that tap into its global network to support this key customer base.

HSBC’s global banking services offer clients 360-degree international banking solutions to help them make the financial preparations necessary to send a child overseas to study. These include free services such as overseas account opening and additional debit cards, in addition to benefiting from free-of-charge money transfers worldwide.

HSBC’s Wealth Portfolio Intelligence Service (WPIS) employs simulation-analysis technology, which delivers personalised analysis and recommendations that take into account the risk level of a client’s overall portfolio. Clients are not only able to monitor their portfolios digitally through the HSBC mobile app and online banking, they can also test it against different market scenarios.

A similar feature has been added to the bank’s Future Planner, which allows clients to forecast and define their short-term and long-term wealth goals. The feature means they can simulate their plans by using different HSBC products, allowing them to have a clearer, more targeted picture of their financial goals.

And while the study says many respondents are thinking of investing in overseas property, they often express reservations about making such purchases, citing complicated tax regimes and physical barriers as their top concerns. By leveraging its International Banking Centre, HSBC customers can access the bank’s global expertise, providing tax and legal support as well as connecting with consultants in specific countries.

Together, the bank says these new features are part of its ongoing upgrades to provide international services and wealth solutions to its customers to help them meet their financial aspirations, even amid challenging market conditions.

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