Nearly three in 10 High Net Worth individuals (28%) are considering cutting back their pension contributions as the cost of living crisis bites.
HNW clients say cutting back on pension saving is on their agenda as costs rise.
The finding is from the latest Wealth Index survey from wealth manager and Financial Planner Saltus.
The survey reveals HNW clients are increasingly concerned about the UK economy although many remain confident about the longer term.
Inflation is seen as the biggest risk to wealth for HNWIs, with older respondents the most concerned.
The index also shows a drop in the proportion of HNWIs feeling confident about the UK economy but despite the challenges, HNWIs remain positive about their own finances with 81% saying they feel confident about the next six months,
At the end of 2022 Saltus and Censuswide surveyed more than 1,000 people in the UK with investable assets of over £250,000 about their attitudes towards the UK economy, their own wealth and lifestyle.
Currently the Saltus Wealth Index stands at 59.5 out of 100 – a fall of 8.2 points and 12% compared to the previous Index score of 67.7. The drop highlights that HNWIs’ outlooks have fallen considerably in the last nine months, Saltus said.
One in nine HNWIs admit the state of the UK economy is their biggest concern while those feeling ‘unconfident’ increases to one in six.
When asked what their biggest worry was, HNW individuals said:
1. Health (12%)
2. The state of the economy (11.2%)
3. Wellbeing of children (6.9%)
4. Security online (6.7%)
5. Physical safety (6.6%)
6. War in Ukraine (6.5%)
7. The Conservative Government (6.3%)
8. Affording my mortgage/rent (6.1%)
9. Keeping my job/business afloat (5.4%%)
10. Losing money (5%)
Source: Saltus research
The research also revealed that the vast majority of HNWIs (60%) feel anxious about their money, with younger people (73%) much more likely to feel anxious than older respondents (26%).
Despite inflation worries, and wealth anxiety, HNWIs remain largely positive. In the last Wealth Index, when asked how confident or unconfident they felt about the UK economy over the next six months, 77% felt confident, and of those, 29% felt ‘very confident’. Now, the number feeling confident has dropped to 67%, with 27% feeling ‘very confident’.
Michael Stimpson, partner at Saltus, said: “The Wealth Index has dropped significantly over the last nine months but, given we have seen the highest inflation levels in 40 years, interest rates climbing approaching levels that predate the global financial crisis, three Prime Ministers, four different Chancellors, and several Budgets, that should not come as a great shock.
“It is encouraging that, while HNWI confidence in the UK economy has dropped, more than two thirds (67%) remain positive. Yes, HNWIs do have concerns about the impacts of inflation, interest rates and the ongoing war in Ukraine on their wealth, but the vast majority remain confident, and those confidence levels stand significantly higher among those who take financial advice, highlighting more than ever importance of having a robust financial plan in place.”
Dr Michael Peacey, senior lecturer in economics at the University of Bristol, who developed the methodology for the Saltus Wealth Index, said: “While confidence has fallen markedly, things could be worse. Given the unprecedented events of 2022, this drop in confidence is unsurprising. It is also interesting to note that there was only a very modest reduction (3%) in the measure that captures individuals’ confidence about their own finances. This suggests that many HNWIs may have processed the challenges that are approaching, perhaps seeking advice, and taking mitigating steps with their investment and Financial Planning strategies.”
