Unlocking Financial Wealth: Insights from St. James’s Place

A new study launched today by St. James’s Place Asia (“SJP Asia”) finds that more than half of Singaporeans and Hongkongers (57%) do not consider themselves to be financially wealthy.

The study, titled Accelerating the Wealth Journey – From Stability to Abundance, looks at 2,000 affluent Singaporeans and Hongkongers categorised across five different levels of wealth[1] – Financial Stability (ST), Financial Security (SE), Financial Flexibility (FL), Financial Freedom (FR) and Financial Abundance (AB) – and how they approach areas such as wealth creation and intergenerational wealth transfer.

It comes at a time when rising costs of living continue to be a pressing issue for Singaporeans and Hongkongers with Hong Kong ranked as the world’s second most expensive city this year, and Singapore coming in close at fifth[2]. Against this background, it is more important than ever for investors to protect their wealth more than ever from eroding in value amid global economic uncertainty.

Climbing the Wealth Ladder Takes Time   

Across the five different levels of wealth, the study finds that moving from each wealth level to the next takes progressively longer with the average length of time to move from financial stability to abundance taking 36.4 years in Singapore and Hong Kong.

Overall, only 41% of Singaporeans and Hongkongers are happy with their level of wealth, with 46% saying that they would like to be wealthier, and 14% believing they are too wealthy.

In fact, from the stages of financial stability to financial flexibility, most will continue to believe they have too little wealth (ST – 63%; SE – 56%; FL – 50%; FR – 23%; AB – 7%). Only when they attain financial freedom will they believe they have sufficient wealth, and at the point of reaching abundance will most believe they have accumulated too much (AB – 42%).

Oliver Wickham, Asia Partnership Director, SJP, said: “Amid ongoing challenges of inflation, we recognise the rising concerns when it comes to protecting one’s hard-earned savings. Despite these economic headwinds, there are still opportunities for investors to successfully navigate through inflationary times as well as protect and grow their wealth. With a focus on long-term objectives and prudent decision-making, scaling the wealth ladder and progressing to the next level of wealth is not impossible even during uncertain times.”

 Does More Wealth Mean More Stress?

 When asked which areas the respondents would be willing to make sacrifices to generate more wealth over the long term, more than half (52%) have expressed spending on luxury items, followed by work-life balance (45%). When it comes to the third area that most are willing to sacrifice, 42% in Singapore are willing to sacrifice family time, while 38% in Hong Kong choose to sacrifice their hobbies and interests.

Notably, our survey also reveals that the wealthier an individual is, the more likely they are to advocate for sacrificing in other areas of their life to attain goals. As many as 76% of financially abundant Singaporeans believe in making sacrifices in work-life balance as compared to respondents from other levels of wealth (ST – 49%; SE – 46%; FL – 41%; FR – 49%). Financially abundant Hongkongers (42%) choose to sacrifice their family time instead, as compared to respondents from other levels of wealth (ST – 33%; SE – 28%; FL – 23%; FR – 35%).

Looking at what respondents in these markets identify as the most important aspects for growing and maintaining wealth over the long term, they expressed patience in investments (27%), a disciplined investment approach (22%) and financial literacy (22%). Interestingly, more than eight in 10 Singaporeans and Hongkongers (82%) believe if they were more financially literate, they would be more financially wealthy personally.

Across the board, the thought of losing wealth makes nine in 10 Singaporeans and Hongkongers (90%) anxious. In Singapore, the level and frequency of anxiety decreases with each level of wealth although this increases again when the individual becomes financially abundant where 60% have said that they constantly or frequently feel anxious at the thought of losing wealth, compared to only 25% in Hong Kong.

Oliver Wickham, Asia Partnership Director, SJP, said: “Having a specific goal in mind when working towards an ideal lifestyle is a wise first step. However, it’s also important to note that achieving financial independence is a journey that requires discipline, patience and consistent effort. Engaging a dependable financial adviser can equip individuals with the knowledge they require to set realistic wealth goals when it comes to managing financial affairs and help bridge any financial literacy gaps.”

Preservation of Wealth Is Topmost Priority for Most Singaporeans and Hongkongers

The study finds that financial security and protection is one of the top drivers for 69% of Singaporeans and Hongkongers when it comes to building their wealth. This is closely followed by having a good personal lifestyle (64%), providing a good life for their family (61%) and intergenerational wealth creation (43%).

For as many as 83% of Singaporeans and Hongkongers, it is important to them that the next generation protects and grows their wealth, with 37% saying that this is very important. However, Singaporeans and Hongkongers remain split in terms of when they believe intergenerational wealth transfer should take place.

The largest portion believe this should begin when a family member has retired (38%) followed by when a family member is deceased (28%), while they are still living and working (22%) and 13% believe this should never happen.

More than half of Singaporeans and Hongkongers (52%) do not have or do not believe in having a wealth transfer plan. Only 26% have already started transferring wealth to the next generation. Less than half of Singaporeans (45%) have a formal will in place, a slight dip from last year at 47%. This is more pronounced in Hong Kong, with 17% of Hongkongers having a formal will in place, a dip from 24%.

Oliver Wickham, Asia Partnership Director, SJP, said: “Intergenerational wealth transfer can have a profound impact on the long-term financial well-being of families. We believe that maintaining and transferring wealth across generations is beyond the finances but more about preserving legacies and the dreams of future generations. Effective intergenerational wealth transfer requires thoughtful planning and it is crucial that professional financial advisers with deep understanding of the complexities involved as well as market conditions and regulations are brought to the table in order to navigate the journey successfully.”