Urban Indians rate retirement planning as priority: Survey

Mumbai ranks the highest and Chennai the lowest on Financial Intelligence Index

June 27, 2013 3:21 IST | India Infoline News Service
When it comes to financial planning, Indian consumers continue to put their family first, but new research suggests that retirement is quickly gaining traction as a primary financial priority.

Data from the latest edition of Trends and Insights Survey into Financial Goals of Indian Consumers, released today by Ameriprise India, shows that nearly half (48%) of urban Indian professionals consider family their top financial priority. Though a sizable figure, it represents a 22% drop from the 2012 edition of the survey.

Indian consumers’ increasing focus on retirement may account for the change. Nearly a quarter of respondents of the new survey (24%) say retirement is their key financial priority, representing a 140 per cent increase from the last survey, when only 10 per cent categorized it as a key priority.

Shifts in spending priorities also seem to suggest that the Indian consumer is growing more serious about retirement planning. Many of those surveyed have opted to put big-ticket family purchases—for example, travelling around the world, buying secondary homes or cars—on hold to make way for retirement planning. The change is seen across age groups; even the youngest respondents in the age group of 28-33 years are giving increased importance to retirement, with 24 per cent rating it as a key priority.

“The increasing emphasis on retirement planning among Indian consumers is a welcome and encouraging trend,” Kim Sharan, President, Financial Planning and Wealth Strategies, Ameriprise Financial, Inc, said.

“Retirement is a complex and oftentimes intimidating issue to navigate, but research shows that having a financial plan in place can inspire confidence and make for a smoother path to this major life transition,”she further added.

Single women are focused on managing their money but marriage appears to change the dynamics

The study also brings forth new insights regarding similarities and differences in men and women and breaks the common notion that women prefer to be less involved in money matters. Single women, in particular, defy conventional notion in this area by reportedly feeling financially confident at a significantly higher rate than single men (70% vs. 56%). They also engage in their finances at a younger age, by investing their money earlier than single men (25 years on average for women vs. 26 years for men) despite joining the workforce at the same age (24 years).

In general, men and women share similar financial goals and risk profiles; however, they appear to take different approaches to investing. Overall, women talk to a lot of people when deciding how to allocate their assets, and they tend to invest in more conservative instruments compared to men. Meanwhile, men tend to make retirement a greater financial priority than women.

Financial Intelligence Index: Mumbai ranks the highest however shows room for improvement

The Trends and Insights survey also assesses the financial savvy of residents in six major cities in India, ranking them according to their residents’“financial intelligence.”Mumbai tops the Financial Intelligence Index, followed by Delhi, Hyderabad, Pune, Bangalore and Chennai in last. Even though Mumbai ranks first, it reaches a score of only 5.8 on a scale of 1-10 in terms of financial intelligence, showing clear room for improvement.

Sharing his views about Financial Intelligence Index, Kapil Narang, Chief Operating Officer, Ameriprise India Advisory Services said, “We have created a Financial Intelligence Index that rates the financial acumen of investors in six major cities of India. It is fairly interesting to see how residents in a city seem to be doing very well on some aspects of managing their finances but lag behind on others. For instance, Mumbai scores high on having a diversified portfolio, utilizing professional advice and investing early but shows room for improvement on goal-based planning with long-term approach. On the other hand, Delhi fares well on goal-based and long-term planning, portfolio diversification and taking professional advice but investors typically start investing late.”

He further added,“We feel that this index will help showcase cities that are doing well and also help individuals in cities understand how they can better manage their personal finances.”

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