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'Rescue Me' Mentality

>> Tuesday, September 15, 2009

Not only do Asians hope to be "rescued" when it comes to planning their personal finances, they also believe the only way to ensure they will save for their retirement - is if it is required by law.

Such attitudes, reflected in a survey by Aviva, are a result of the financial crisis having shaken consumer confidence in the financial sector, leaving consumers feeling "helpless" about planning for retirement, said Mr Simon Machell, chief executive of Aviva Asia.

The annual global survey, in its sixth year, saw a sharp drop from the previous years' findings which had registered growth in consumer confidence over personal finances.

For example, in India, the proportion of consumers claiming not to understand pensions and savings policies rocketed from 41 per cent last year to 70 per cent.

Asians are also looking to their governments to help them save for retirement, with over 65 per cent of consumers in India, China and Hong Kong indicating as such.

Only 21 per cent in the United States and 37 per cent in the United Kingdom felt the same way.

"I think probably some of the confidence before was false confidence in a way, so people saw stock-markets rising, they saw their savings go up - but they probably didn't understand what was driving that," said Mr Machell.

Most Asian consumers felt they lacked the information to make well-informed decisions about personal finances, and financial markets in some Asian countries were also less mature, leading to less confidence from consumers, he added.

Both governments and the savings industry will have to work harder to educate the public about financial planning, such as how much one should set aside for retirement needs, and how to pay for things like long-term health care.

With consumers' trust in financial institutions and the savings industry having been battered, the industry will also have to work to rebuild trust by providing "clear information", said Mr Machell.

Consumers would also be expecting different and less risky financial products than before, he added.

The survey involved 28,000 customers in 26 countries.

In Singapore, many also rely heavily on the government's actions for personal financial planning. In the area of insurance, Dependant Protection Scheme (DPS), Home Protection Scheme (HPS). For medical coverage, Medishield and Medisave. For retirement, CPF OA, SA and CPF LIFE now.

It has been taken granted and many rely solely on the government for all their personal financial planning. More emphasis should be placed on educating the public to take responsibility of their own finances.


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