80 per cent of spouses are not conscious of the detailed assets and liabilities of their partners, revealed the most current survey by Mudra Portfolio Managers, a international major NRI and HNI economic service management firm headquartered in Mumbai. The survey was carried out for about 900 High Networth Individuals (HNIs), Non-Resident Indians (NRIs) and Retail customers from India, Africa (Kenya, Nigeria), Singapore, Malaysia and Middle East (Dubai, Abu Dhabi, Kuwait).
Another startling truth from the report stated that 89 per cent of respondents had never ever performed a consolidation of their finances, although 73 per cent of the respondents had not performed a detailed revenue expense evaluation ever.
This survey was a component of Mudra’s Investor Awareness Program, exactly where the firm carried out a ‘Consolidation Activity’ to assistance its associates get financially organized. The survey covered 4 critical elements covering a detailed evaluation of revenue & costs, economic threat assessment, assets & liabilities to analyze asset allocation & liquidity and lastly, ease of access and consolidation of finances. The activity was carried out for a period of 10 weeks.
“Lockdown and the associated uncertainties during Covid left people greatly concerned but on the other hand made them relook into their financial portfolios, something they had never cared for. The idea behind this consolidation activity was to make them aware of the criticality of doing a self-analysis of their finances, the importance of financial consolidation and the need of getting one’s family involved in financial matters,” stated Nishant Kohli, Founder, Director and Business Head-Wealth, Mudra Portfolio Managers.
“This activity was done to help them find answers to some unanswered questions like ‘are my savings enough’, ‘do I have a contingency plan!’ or ‘are my expenses overboard’ or even, ‘where my current investments are and what do I do with them!’ etc.” he added.
Interestingly, 65 per cent of the respondents have been saving much less than 20 per cent of their salary and out of these, 80 per cent of them had their miscellaneous costs as considerably as 15 per cent-20 per cent of their salary, which could have been curbed and saved. This trend was greater in people today earning much less than 50 lakhs p.a. The month-to-month Investment to Savings ratio in the earning group of 30 lakhs and under was discovered out to be .65 which for the earning group of 30 lakhs and above stood at only .38 as they favor to hold more funds in the accounts. This shows that the greater revenue groups ordinarily do not optimally invest on a normal basis in comparison to decrease-revenue groups.
Under Financial Risk Assessment the survey also shows that 71 per cent of the respondents have no well being insurance coverage except a single supplied by their firm. Shockingly, the parents of as quite a few as 88 per cent of respondents did not have well being insurance coverage although the households of 80 per cent of respondents have been not conscious of the information of their insurance coverage cover.
In terms of life and term insurance coverage, Mudra portfolio Managers discovered an additional alarming trend. A whopping 79 per cent of the respondents have been underinsured although 35 per cent did not have a term program, and 32 per cent wrongly believed that they had their lives insured but their insurance coverage cover was much less than 30 lakhs. Families of as quite a few as 75 per cent of respondents have been not conscious of the information of the insurance coverage cover.
An assessment of Assets and Liabilities beneath the plan revealed that 90 per cent of the respondents had a contingency fund equal to 6 months of their salary. 70 per cent of the respondents, who had bought the home in final 2-3 years, had overstretched themselves resulting in getting much less than 9 months of annual revenue as liquidity. Although loan ROIs have come down to the lowest, nonetheless 70 per cent have been more inclined towards repaying loans rather of keeping liquidity or producing an investment. 78 per cent of the respondents had no appropriate assets allocation. They have been overweight in a single form of asset.
When it came to the Consolidation of Finances, 89 per cent of the respondents had never ever performed their economic consolidation. 80 per cent of the spouses have been not conscious of the detailed assets and liabilities like the account information, although a appropriate nomination was missing in 54 per cent circumstances. Through this activity, 35 per cent of the customers had forgotten about modest chunks of investments performed lengthy back.
“I believe that knowing the problem is half as good as solving it. This program allowed people to reflect on their existing financial standings and proved to be an eye-opener for most of them. We feel excited to have done this exercise as our clients really liked our initiative, especially the spouses as it ensured a productive communication with their partners towards sharing the financial responsibilities and maintaining healthy finances of their household,” added Nishant.
“Having one’s investments skewed towards one asset class is not a good sign for a healthy investment portfolio. Sometimes it is extremely critical to self-analyze one’s financial standing, especially for those whose jobs keep them too occupied. For instance, I never knew that I was highly underinsured until I undertook this assessment. This consolidation exercise has shown me key areas of improvement and has been quite helpful for me and my family and I would recommend this to everyone,” stated Sameer Balakrishnan, Assistant Vice President at Mashreq Bank, Dubai who lately undertook the consolidation activity by Mudra Portfolio Managers.
The activity was carried out with a respondent mix of 40 per cent HNIs, 35 per cent NRIs and 25 per cent retail with 60 per cent of people today with an annual earning of more than INR 30 lakhs, 30 per cent people today of annual earnings involving INR 10 and 30 lakhs and 10 per cent with salary up-to INR 10 Lakhs.
“Everyone should do their financial consolidation as it is extremely beneficial. In these times it is very critical to ensure that we become more systematic and focused on our goals. At the same time, there arise various what-if scenarios for instance, what if I’m not there tomorrow, my family should know our financial worth as well as have a clear picture of the investments,” stated Pankaj Agrawal, Managing Partner at Leela Fincare Group about the Consolidation Activity. “Such an exercise, though time-consuming at first, becomes a ready reckoner of the areas we need to work upon to be financially sound. It’s worth it,” he added.