Singapore is renowned for its thriving economy and high standard of living, but how financially resilient are its citizens? The Sun Life Asia Financial Resilience Index, a survey conducted across eight key Asian markets including Singapore in late 2023, sheds light on this question and reveals some intriguing insights into the financial planning landscape in Singapore.

Wealth and Financial Resilience

The survey found that while 65% of Singaporeans are more positive about their financial future compared to the previous year, only 23% make financial plans on a 5-year horizon or beyond. This disparity between optimism and long-term preparedness highlights a critical gap in financial planning among Singaporeans.

Interestingly, even among the wealthiest respondents, many Singaporeans lack preparedness and underestimate their expenditure levels or the benefits of building a long-term financial plan.

The survey revealed that 52% of high-income earners spend beyond their monthly budget, and only a minority are planning for the long term, with 24% planning 1+ years ahead and 19% planning 5+ years ahead.

Sun Life Asia survey shows a gap when it comes to Singaporeans’ optimism about their finances versus their long-term preparedness. Source: Sun Life Asia Financial Resilience Index

Millennials Leading the Way and the Need for Education

Millennials in Singapore appear to be the most financially resilient generation, with enough investable assets, less familial obligations than older groups, and a balance of adventure and knowledge to build toward their financial future.

The survey found that 75% of millennials are more confident than older age groups in their ability to meet long-term financial goals, 27% are more likely to have a 5+ year financial plan in place, and 71% have higher financial resilience in managing their finances month-to-month.

The survey also found that perceptions of trust and emotion play a large part in financial behaviour, with 42% of respondents saying it influenced their financial decisions. Furthermore, financial education was identified as a key desire by 39% of respondents, underlining the need for better access and professional help in financial management.

The Role of Wealth Management Tools in Singapore’s Financial Planning

This is where wealth management tools like Endowus, Kristal.ai, and StashAway can play a crucial role in helping Singaporeans better plan for their financial future. These digital platforms offer a range of investment options, financial planning tools, and educational resources to empower users to make informed decisions about their money.

One of the key advantages of wealth management tools is their ability to provide personalised investment strategies tailored to an individual’s financial goals, risk tolerance, and time horizon.

Millennials are the generation in Singapore with the most financial planning. Source: Sun Life Asia Financial Resilience Index

Platforms like Endowus and StashAway use advanced algorithms to analyse a user’s financial profile and create customised investment portfolios that are designed to maximise returns while minimising risk.

For example, Endowus offers globally diversified portfolios that are regularly rebalanced to ensure optimal performance, while StashAway uses a proprietary investment framework called Economic Regime-based Asset Allocation (ERAA) to adapt to changing market conditions.

By leveraging these sophisticated investment strategies, users can benefit from professional-grade asset management without the high fees typically associated with traditional financial advisors, which can typically be a drawback for younger investors led by millennials.

In addition to investment management, wealth management tools also offer a range of financial planning features that can help users take a more holistic approach to their finances.

How financially resilient are people in Singapore vs the rest of Asia? Source: Sun Life Asia Financial Resilience Index

Education and Insights Highlight Financial Planning Literacy

Another critical role of wealth management tools is to provide users with the education and insights they need to make informed financial decisions. As the Sun Life survey found, financial education was identified as a key desire by 39% of respondents, highlighting the need for accessible and engaging learning resources.

Platforms like Kristal.ai and StashAway place a strong emphasis on investor education, offering a wealth of articles, videos, and webinars that cover a wide range of financial topics, from the basics of investing to more advanced concepts like portfolio diversification and risk management.

Perceptions of trust and emotion play a large part in financial behaviour, and financial education was identified as a key desire by 39% of respondents. Source: Sun Life Asia Financial Resilience Index

By empowering users with knowledge and understanding, these tools can help demystify the world of finance and enable Singaporeans just starting on their financial planning journeys to take greater control of their financial futures.

Accessible and Convenient Financial Planning in Singapore

One of the biggest barriers to financial planning and investing has traditionally been accessibility. Many people feel intimidated by the complex jargon and high minimum investment requirements associated with traditional financial services.

However, wealth management tools have democratised access to professional-grade investment management and financial planning, making it easier and more affordable for individuals to take charge of their finances.

With mobile apps and user-friendly interfaces, platforms like Endowus, Kristal.ai, and StashAway have made it possible for users to manage their investments and track their financial progress on the go, from anywhere in the world. This level of convenience and accessibility has been a game-changer for many people, particularly younger generations who are more comfortable with digital technologies.

Even high-income earners in Singapore have gaps in their financial planning. Source: Sun Life Asia Financial Resilience Index

Collaborative Financial Planning in Singapore

Finally, wealth management tools are also playing an increasingly important role in facilitating collaborative financial planning between individuals and their loved ones. This collaborative approach to financial planning can be particularly valuable for couples and families who are working towards shared financial goals, such as saving for a home or planning for retirement.

By providing a shared platform for communication and decision-making, wealth management tools can help align everyone’s expectations and ensure that all parties are working together towards a common objective.

By leveraging these wealth management tools, Singaporeans can take a more proactive approach to financial planning and build greater resilience in the face of economic uncertainties. Whether it’s setting long-term financial goals, creating a budget, or investing in a diversified portfolio, these platforms provide the resources and support needed to make sound financial decisions.

The Sun Life Asia Financial Resilience Index highlights the importance of financial planning in Singapore and the need for greater financial education and access to professional advice. While Singaporeans are generally optimistic about their financial future, there is a clear gap in long-term preparedness, even among high-income earners.

Wealth management platforms like the above can help bridge this gap by providing users with the resources and support they need to build greater financial resilience and achieve their long-term financial goals.

Featured image credit: Edited from Freepik

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• Source: https://fintechnews.sg/96256/wealthtech/how-wealthtech-is-changing-the-game-in-singapores-financial-planning-landscape/