High-Net-Worth Individuals Struggle with Savings and Diversification, Survey Finds

A recent survey conducted by Marcellus Investment Managers has shed light on the financial habits of high-net-worth individuals (HNIs). The findings are concerning, as a significant percentage of HNIs are falling short of their savings goals despite their high incomes.

According to the survey, 43% of high HNIs save less than 20% of their post-tax income, and 14% do not maintain an emergency fund. For example, a 44-year-old banking professional in Mumbai, earning Rs 50 lakh annually, manages to save only Rs 5 lakh per year. The majority of their income goes towards EMIs and children's education, leaving little room for savings.

Saurabh Mukherjea, Co-Founder of Marcellus Investment Managers, highlighted that affluent Indians are living in a world of high aspirations and low savings, further complicated by illiquid, tax-inefficient portfolios. Without a clear financial roadmap and disciplined investing, their financial goals remain unattainable.

The survey also revealed that HNIs have a strong preference for real estate over other asset classes. More than half of the respondents have over 20% of their assets in property, excluding their primary residence. In contrast, only one-third of the respondents have more than 20% of their assets allocated to equities.

Mukherjea noted that Indians have too much real estate, too much exposure to small-cap stocks, and very little global equity. Diversified portfolios are rare, even among the HNI community. This lack of diversification can be a significant risk, as it limits the potential for growth and increases vulnerability to market fluctuations.

The survey found that 76% of ultra-HNIs are aware of the investment corpus required for a comfortable retirement. However, diversification remains low, with 82% of respondents believing that professional financial planning is crucial for achieving long-term financial goals. Additionally, 51% of HNIs seek more guidance on diversification, and 38% want customized asset allocation aligned with their risk-return appetite.

Despite aspirations such as early retirement, home ownership, entrepreneurship, and children’s education, many HNIs lack personalized financial planning and the discipline needed to turn these goals into reality. The survey highlights a growing appetite for expert advice, with 82% of respondents believing that professional financial planning can improve their chances of achieving long-term goals.

The survey was conducted across 465 households in 28 cities, with all respondents aged above 30 years and having a post-tax income of Rs 20 lakh. The insights from this survey underscore the importance of financial education and professional guidance in helping HNIs achieve their financial objectives.

In conclusion, while HNIs have the financial means to achieve their goals, the lack of savings, poor diversification, and a need for better financial planning are significant hurdles. Professional financial advice can play a crucial role in helping HNIs navigate these challenges and secure their financial future.