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Indians optimistic on the economy: Principal's Financial Well Being Index 2014

Mutual Fund

by Principal Mutual Fund | Mutual Fund | 11 Downloaded

  • Second edition of the annual study, conducted for Indian Households, highlighting the increase in overall optimism about economic outlook vis-a-vis last year

  • Improved optimism amongst households with respect to Inflation of food, fuel & household items. Also improved optimism with respect to INR Vs US$

Mumbai, February 11, 2015: Principal Retirement Advisors (India), part of the Principal Financial Group® USA, has released the second edition of the Principal Financial Well Being Index in India. The study, conducted across 11 cities including Tier I & Tier II cities along with its research partner – Nielsen Company, aims to gauge the financial well-being of Indian households / employees.

The Financial Well-Being Index is a very important initiative of the Principal Financial Group and it is currently in its 13th year running in the US. For the past decade and more, the Well-being Index has served as an important source of insights into the American household’s perception & concerns with respect to their own financial well-being and hence has become popular and been widely followed.

In India too, the research was initiated with a similar objective and the study has managed to capture the perceptions and concerns of the Indian Households about the economy, household spending, savings and investment attitude and other related trends. The Well Being Index also touches upon Indian’s perceptions and attitude towards financial planning, retirement planning, employee benefits and availing the services of financial advisors.

Mr. Rajan Ghotgalkar, Country Head – India, Principal International said, “It is exciting as well as encouraging to see the optimism in Indians, reaching a new high as we enter 2015. While the sentiment is upbeat, it is very crucial for households to continue focusing on taking concrete steps towards building their financial future. The Well-Being Index is a source of some very useful insights on how we perceive & feel about our economy and our finances. We hope this will help all the stakeholders to collectively educate and empower investors”

According to the study, some of the major findings are summarized below:

Perceptions & Concerns about the Economy in general

  • Overall optimism about the economy has increased in the last 1 year

  • Pessimist view exhibited increases as we go lower down the SEC

  • Except Jaipur, optimism has increased across all 10 cities, about improved economic outlook. Significant improvement in Delhi, Mumbai, Bangalore, Pune & Chandigarh

  • Unemployment (73%), rising inflation (69%), fuel prices (63%) and corruption (61%) continue to be top concerns in the economy in the next 1 year.

  • Overall 52% respondents feel that the prices of groceries, fuel and other household items will go up in next one year. This is a drop of 25% from previous year. So lesser pessimism on rising prices for useful items

  • Concerns on food and beverages continue to top the list while others have reduced.

  • A positive perception of the Indian Rs. Vs the US $ observed compared to last year. 22% believe the Rs. will gain compared to only 9% last year.

Household Spending, Savings & Investments

Household Spending:

  • There is a slight increase in conservativeness when it comes to spending as compared to last year

  • Increase in Household spending - Both actuals and expectations have come down vis-a-vis last year

  • Most Households expect spending to increase across all categories.

  • Children expenses (education & marriage) (68%) and Buying a House/property (57%)continue to be big ticket expenses expected in 2015

Holiday Plan: 59% people say they are not planning a holiday in 2015. The number has decreased from 73% in the last year.

Festivity spending: 62% people say they will spend the same amount as last year in the upcoming festivities

Planning for Unexpected Expenses/ emergencies: Redeeming investments/savings, borrowing from friends or family, selling property still continue to be the top avenues for coping with unexpected expenses. Only 28% said that they had some kind of emergency corpus available

Household Savings & Investments Satisfaction levels:

  • 73% respondents are satisfied with their current levels of savings.

  • 63% respondents say that their savings have stayed the same in past 1-2 years.

  • 77% respondents say that they started investing before the age of 35 years.

  • 69% respondents are satisfied with their current level of investments.

Financial Priorities & Attitude towards finances: Overall respondents feel that they are financially prepared for retirement showing an increase in savings and investments. Children’s Goals & Buying a House are the top financial priorities across all the age-groups.

Availing services of Financial Advisors

  • 58% of respondents rely on the help of financial professional when making important financial decisions

  • Experience (57%), Qualification (51%), Trust (44%) & Reputation (42%) are the key attributes that people look for in an advisor

  • Almost 70% people consult financial advisors referred by their friend / family & co-workers

  • Setting Financial Goals (54%), Tax Saving / planning (47%) & investment advice (46%) are the top 3 reasons for consulting a financial advisor

  • Retirement planning also figures prominently with 41% respondents consulting financial advisor for the same

  • Overall 68% respondents feel that Financial Advisor plays an important role

  • Overall 61% respondents feel more financially confident after availing services of Financial Advisor

  • 57% people cite their own awareness / knowledge, as the foremost reason for not consulting a financial advisor

  • 27% of those not consulting a financial advisor are willing to pay fees for financial advice in future

Retirement planning: attitude & perceptions

  • Staying happy & stress free (56%) and having enough savings (49%) are the main thoughts for post-retirement finances

  • 65% plan to retire between 56-60 years of age

  • Overall 49% people claim to have started investing for retirement at age of 26 – 30 years

  • Children education (22%), buying a house (15%) & children marriage are the Top 3 aspirations post retirement. Travel also features prominently in the list

  • 49% people claim to know how much money they require post retirement. Only 53% keep inflation in mind for retirement planning

Employee benefits & satisfaction levels

  • 46% respondents feel that employee benefits are critical for employee retention / better performance.

  • Life Insurance (42%) and Health Insurance (37%) are the most commonly offered employee benefits by employer

  • Health Education Programs, Tuition reimbursement, Mobile Reimbursement, Legal services, and Loans are the top 5 benefits with highest satisfaction levels

  • Financial Planning benefit also scores very highly amongst the employee benefits with highest satisfaction levels

The Principal Financial Well Being Index - US

The Principal Financial Well-Being Index is a very important initiative of the Principal Financial Group (PFG) in the US and is currently in its 13th year running. PFG, as champions of Financial Well Being, started the Well Being Index with an aim to keep a finger on the pulse of the financial well- being of American workers. It is a quarterly survey conducted in the US along with its research partner Harris- Interactive. Through the Well Being Index, the Principal, not only gauges the Financial Well-being of American workers but also focus on the concerns, attitudes and behaviors of people as it related to the topics of financial security.

The Principal Financial Well Being Index – India

Principal Retirement Advisors Pvt. Ltd., part of the Principal Financial Group, conducts the Well Being Index study in India with an aim to gauge the financial well-being of Indian workers. The study has been conducted along with its research partner – Nielsen Company and this is the second year of the study.

About the Principal Financial Group

The Principal Financial Group® (The Principal ®) is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $517.9 billion in assets under management and serves some 19.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

About Principal Retirement Advisors

Principal Retirement Advisors (PRA) is India’s first dedicated retirement solutions specialist, bringing over 65 years of experience of the Principal Financial Group in retirement planning in the United States and other global markets. PRA offers personalized financial advisory services to individual clients to address their various life stage needs leading upto a financially secured and independent retirement. Besides Advisory services, the offerings include investment execution, insurance, estate planning etc.

PRA is SEBI registered Investment Adviser. Headquartered in Mumbai, the company has offices in Delhi, Bangalore, Chennai, Kolkata, Hyderabad, Pune, Ahmedabad, Chandigarh, Jaipur and Lucknow.

Research Design & Methodology

The research has been conducted in 11 cities with a total sample size of 1585 respondents

Cities: Ahmedabad, Bengaluru, Chennai, Chandigarh, Delhi, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Pune

Respondent Profile

  • Age: 25-60 years

  • Males and Females

  • SEC: A & B

  • Annual Household Income: INR 5 lac+

  • Salaried or self-employed professionals: Employed full time/part time with either a small*/medium*/large* sized company

Type of Study: Quantitative research conducted using a structured questionnaire in a CAPI (Computer Aided Personal Interview) format.

Research Methodology:

  • Interviews conducted at respondents’ home. In a given household only one member was interviewed

  • A given market has been divided into several zones and these have been further split by different starting points, in order to ensure sufficient randomness in the sample

  • Quotas maintained for demographic parameters namely Age, SEC, Gender & Employment Status

( Mutual Fund investments are subject to market risks, read all scheme related documents carefully.)

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