Survey: HNWIs reliant on online advice know the least about finance

Added 13th May 2015

Survey: HNWIs reliant on online advice know the least about finance

The gap between perceived versus actual financial knowledge has driven Asian high net worth individuals to increase their investment knowledge, according to the M&G Asia wealth barometer. 

While wealth managers are the number one resource (55%) for sourcing investment ideas and information, digital media (48%) and friends and family (48%) also followed closely. 

But investors who are most reliant on digital media have relatively less financial knowledge than those who consult the other sources, the study found.

“We notice a trend that those who are most reliant on digital media resources, particularly ultra-HNW investors and those who are based in the emerging markets such as China and Indonesia, have the greatest gap between their perceived and actual level of knowledge,” said Andrew Hendry, Asia managing director. 

“It shows these HNW individuals are struggling to translate the abundance of information from the internet into meaningful investment knowledge,” Hendry said.

Nearly 65% of respondents in Indonesia and China showed high confidence in using the internet to improve their financial situation. This is in contrast to 39% and 42% in Hong Kong and Singapore, respectively. 

“In order to help clients make informed investment decisions and achieve wealth creation and preservation goals, wealth managers and private banks need to find a compelling way to engage this audience,” he added.

Source: M&G Investments

“We believe this trend overall has created a great opportunity for the wealth management community to fully embrace the digital age and support the Asian wealthy with financial education, which is very much sought after,” Hendry added.

Financial knowledge gap

Source: M&G Investments

HNWIs in the four markets rated their own financial knowledge at around 60 to 65 out of 100 and aspired to attain a level 
of 70 to 80 in future. 

Singaporean HNWIs proved to be an exception, with almost equal levels of perceived versus actual knowledge. 

Singaporean respondents had the highest average score for actual financial knowledge at about 64, in contrast to the lower scores in Hong Kong, China and Indonesia at approximately 54, 48 and 37, respectively.

“The knowledge gap is particularly apparent in China and Indonesia, where there is a difference of 16 and 26 points respectively between perceived and actual levels of financial knowledge,” the report said.

Chinese investors’ desired level of investment knowledge was the highest (80), while Hong Kong has the lowest (72).

Meanwhile, the survey findings also showed investors with higher net worth scored lower in terms of actual financial knowledge and had a higher tendency to overestimate their financial knowledge. 

Source: M&G Investments

The fund house carried out the survey in March, contacting 1,000 individuals in China, Hong Kong, Indonesia and Singapore with an average net worth of $6.8m. 

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