Retirement Planning and Digitisation – Need of the hour

A consumer awareness initiative by Standard Chartered Bank in association with CNBC-TV18 under the India on the Move series (Season 5),  telecast on 17th August 2021

The sensitivity around retirement planning has become a thing of the past, as people are eager to generate, allocate and manage wealth well past their prime.  Mridu Bhandari, special correspondent, CNBC-TV18 engages with Industry experts to understand the principles of retirement planning, asset allocation strategy, and the digitalisation in the wealth management space.  The panel comprises Rajesh Saluja, CEO & MD, Askwealth, Deepak Shenoy, Founder & CEO, Capitalmind, and Samrat Khosla, MD & Head of Wealth Management, Standard Chartered Bank.
 
Robust retirement planning strategy
Speaking on retirement planning Rajesh mentioned that the first step is the assessment of the age of retirement, secondly, the current income, and lastly, the expected lifestyle post retirement.  Post taking into account different health, family, lifestyle goals, one must consider inflation which he cautions is the single largest risk to the corpus being generated for a retired life.
 
Giving us a peek into trends defining investment across millennials, Samrat spoke about impact-driven investments and profit-making.  A Wealth Expectancy study conducted annually by Standard Chartered had key observations that revealed that a majority of the respondents have a financial strategy in place, on the other hand, close to 50% are worried that they may not be able to achieve their financial goals.  Given the increase in life expectancy, respondents displayed an inherent desire to thrive in their retirement. Prompted by the apprehensions of an increase in the average life span, clients today are aggressively demanding high-quality insights, digital assistance and personal intervention from the banks and financial advisors.
 
Deflating the impact of Inflation
Elucidating the effect of inflation on retirement corpus, Deepak explained how it ends up eroding investments over time, compelling the investor to increase savings. Further, he suggests a 60:40 ratio of equity to fixed income and at the same time understanding the principles of compounding in this regard. Interestingly, Capitalmind has a tool that helps prospective clients understand how much to save to meet this challenge.
 
Sound portfolio management
Commenting on the must-haves in a portfolio, Samrat emphasised the need for a balance between certainty and flexible diversified allocation.  He explained that a portfolio should comprise various asset classes such as bonds, stocks, and gold.  He added that diversification and alignment of allocation strategy to risk appetite is of paramount importance.
 
Timely check on retirement corpus data
Deepak quoted “I think the optimum time to rebalance a portfolio is a regular review maybe once a quarter or once in six months”.  He further stressed on the need to keep a handy reckoner on the investments, so incase of an emergency, the family has a track of all investment records, and this should be done at least once a quarter.
 
Ease of operations with Digitisation
Client onboarding has become far simpler with video KYCs becoming a norm, leading to reduced dependency on the relationship managers.  Rajesh is ecstatic about the future prospects as he exclaimed “A lot of work is ongoing in the space of artificial intelligence, in the way you sort of look at portfolio analytics, the kind of inputs you can give your clients, decision making for client portfolios, or how clients interact with their portfolio or get details on the same”.
 
Speaking on the rate of technological evolvement, Deepak said “Going forward, you are going to see a ubiquity in technology, we have automated algorithms so that we reduce the need for a fund manager, we use passive algorithms to track the nifty or the different indexes, even invest abroad to reduce the cost to the extent where the customers see much more of the benefit”.
 
Samrat further added “We have market insights available on-the-go on our app, we have now enhanced these insights to be also available in the form of podcasts for those who wish to consume this in bite-sized audio formats. We recently launched a new and a completely revamped investing platform that enables first-time investors to easily access funds, fund ideas, market reports, pre-packaged investment packs, and a complete end-to-end journey in just a few clicks”.  He also spoke about other interesting value-added advancements that are in the works, which are sure to make the client journey more convenient.
 
Lastly, the discussion concluded on the topic of succession planning and Rajesh opined that only 5% of his clientele are approaching this in a structured manner whereas for majority of the people it largely remains a substandard effort.  He also observed how drawing a will is a neglected act in most households, as people are awkward to discuss the topic of inheritance with family members. On the other hand, some clients are taking the effort to hire professionals for asset and wealth management, he said, “A bunch of clients are hiring wealth management firms for a full-fledged strategy not just for wealth management but wealth preservation and even wealth transfer”.

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