AIA Hong Kong today announced the key findings of its AIA Wealth Management Survey 2015 (the “Survey”). The Survey examines the wealth management goals and attitudes of working adults in Hong Kong, and the key findings are:
- Hong Kong people’s “First Pot of Gold” has risen in value from HK$2 million to HK$2.4 million;
- The top three objectives of Hong Kong people in saving money are (ranked in order): to travel around the world, to fully own an apartment, and to retire early;
- One out of every two parents wishes to leave a financial legacy for his/her children - the average amount of this legacy is HK$2.3 million; and
- People who have financial planning enjoyed nearly three times the investment return in the past year than those who did not.
Ms. Bonnie Tse, General Manager, Business Strategy and Marketing of AIA Hong Kong and Macau, said, “As ‘The Real Life Company’, we recognise the growing demand for wealth management and insurance solutions. People wish to effectively accumulate wealth in the current low interest rate and high inflation environment. Having a clear goal and the right strategy are key to smart wealth management. To help customers achieve long-term, sustainable wealth growth, AIA Hong Kong has launched the brand new ‘Bonus Power Plan’. This new plan features a choice of two relatively short premium payment periods, 5 or 10 years, with attractive potential returns over time to enable our customers to realise saving goals.”
AIA Hong Kong commissioned GfK Hong Kong, an independent market research company, to conduct the survey via online questionnaires in July 2015. The survey respondents were 521 working adults between the ages of 20 and 59.
Key findings of the Survey:
(1) Hong Kong people’s "First Pot of Gold" has risen in value from HK$2 million to HK$2.4 million
- The respondents’ “First Pot of Gold” was on average HK$2.4 million, representing an increase of 20% from the HK$2 million as revealed in AIA’s Survey of Wealth Management Attitudes 2014;
- In the 2014 survey, 4% of respondents replied that they had earned their “First Pot of Gold”. In the 2015 survey, just over two-tenths (22%) of respondents said they had. Both surveys show that most people had yet to accumulate their “First Pot of Gold”;
- 30% of respondents who had their “First Pot of Gold” attributed their wealth to property investment, followed by regular savings (23%). However, there were 29% of people who had not yet earned their “First Pot of Gold” believed they could become wealthy only if they were lucky enough to win the “Mark Six” lottery.
(2) The top three objectives Hong Kong people in saving are (ranked in order): to travel around the world, to fully own an apartment, and to retire early
- Hong Kong people save to achieve the following top three goals: to travel around the world (58%), to fully own an apartment (55%) and to retire early (51%). For young respondents aged between 20 and 29, obtaining full ownership of an apartment (64%) is their top priority;
- The approximate average amounts required for accomplishing the three goals are: around HK$0.96 million to travel around the world, HK$4.1 million to fully own an apartment and about HK$5.57 million to retire early.
(3) One out of every two parents wishes to leave a financial legacy for his/her children - the average amount of this legacy is HK$2.3 million
- Some surveyed parents shared that they did not save solely to support their own retirement. Almost half (47%) of parents aspire to leave their children a financial legacy, and the average amount is HK$ 2.3 million;
- Over a quarter (26%) of parents listed “helping their children buy an apartment” among their saving goals.
(4) People who have financial planning enjoyed nearly three times the investment return in the past year than those who did not
- Two-thirds (66%) of respondents said they had financial planning to realise their saving goals. However, over half (55%) of these respondents were not sure or even had no idea about how much to save;
- Deposits (87%) were the most popular savings/investment vehicle among respondents for the past 12 months, followed by stocks (62%) and insurance with savings/dividends (48%). According to AIA’s Survey of Wealth Management Attitudes 2014, respondents allocated almost 60% (59%) of their personal assets to cash/demand or time deposits. Cash deposits are still widely considered by many to be a wealth management tool, as the findings reveal. People who rely on such deposits will miss many opportunities for wealth accumulation in a low interest rate environment. Cash deposits are also highly susceptible to the erosion by inflation.
- When asked about their returns over the past year, respondents who had financial planning (10.8%) enjoyed about three times the return on investment over the past year than those who did not (3.8%).
Key features of AIA’s new “Bonus Power Plan” include:
- Competitive long-term returns to help customers accumulate wealth
- In addition to a guaranteed cash value, customers can enjoy potential long-term attractive returns with the non-guaranteed Reversionary Bonus and non-guaranteed Extra Bonus starting from the third Policy Anniversary;
- Reversionary Bonus – customers can accrue the face value of the Reversionary Bonus throughout the duration of the Policy, allowing their Policy value to grow with time. Once declared, the face value of the Reversionary Bonus forms a permanent addition to the Policy;
- Extra Bonus – a non-guaranteed Extra Bonus provides customers with additional growth potential of their assets.
- Greater flexibility and control in financial planning
- Customers can choose from two relatively short premium payment periods, i.e. either 5 or 10 years, to enjoy financial flexibility at different stages of life;
Customers are allowed to cash out any bonuses or withdraw any cash value1 by reducing the Face Amount. They may also apply for a Policy loan2 and borrow up to 90% of the guaranteed cash value and cash value of the Reversionary Bonus to help them meet their needs.
- Assured peace of mind with optional riders
- Customers can opt for additional disability insurance series as a rider3 . If the inconceivable ever happens to the Insured or Policyholder, the outstanding premium payment for the Basic Policy will be waived and the Policy will remain in force;
- In the unfortunate event that the Insured passes away, the Beneficiary will receive 105% of the total premiums paid for his/her basic plan or the guaranteed cash value plus any face values of Reversionary Bonus and Extra Bonus (whichever is higher4 ). To further ease any potential financial burden that a customer’s loved ones may face, this plan also offers Supplementary Accidental Death Benefit5 within the first Policy Year.
To celebrate AIA’s 5-year milestone as a listed company, from now til 29 September 20156 , customers who successfully apply for a new basic plan of specified products7 with specific annualised premium will enjoy the following refund offers8 :
- Offer 1: Premium refund up to HK$150,000
- Offer 2: Extra 5% of annualised premium refund on any application for specially selected products (including “Bonus Power Plan”) 9
Moreover, from now till 29 October 201510, customers who successfully apply for a 5-year premium payment period plan of Promotion Product (including “Bonus Power Plan”)11 and pay the full premium payment upon application12 will enjoy a guaranteed preferential interest rate of 4.0% per annum for USD Policy or 3.5% per annum for HKD Policy for the relevant prepaid premium13, 14 .
AIA’s “Bonus Power Plan” is specially designed for individuals who wish to gain long-term wealth from relatively short payment periods and do not intend to withdraw cash within a short period. Let’s take 35-yearold interior designer Ricky, who is single and wants to start his own business, as an example. He purchases AIA’s “Bonus Power Plan” with an annual premium of US$20,00015 . The premium payment period is 5 years. He hopes to reap higher potential returns through time with this savings plan to make his dreams come true
The below case assumes Ricky does not withdraw any cash at previous age stages and chooses to accrue the total cash value in the Policy. When Ricky reaches age 55, the projected total cash value16 of his Policy is US$280,130, equivalent to approximately 3 times the total premiums paid. At this stage, he may choose to withdraw the total cash value to finance his business or continue to accrue the cash value in his Policy for higher potential returns. At age 65, the projected total cash value16 of his Policy is US$600,343, equivalent to 6 times the total premiums paid. At this stage, he may choose to surrender the total cash value to travel the world with his beloved and live a worry-free retirement life or continue to accrue the cash value in the Policy. When he reaches the age of 75 and 85, the projected total cash value16 is US$1,231,892 and US$2,490,481 respectively. This will be equivalent to 12 and 25 times the total premiums paid, respectively.