Daily News Egypt sat down with Head of Retail Banking and Wealth Management at HSBC Mustafa Ramzi to discuss the report entitled “The Future of Retirement: Healthy new beginnings”. The report highlights the readiness of Egyptian respondents to retire and whether or not they feel comfortable with the idea. During our discussion, we talked about bank’s latest services for its retail customers.
What are some of the major insights the report addresses about the Egyptian market?
This is a survey that we do globally that covers 17 countries. We have been doing it since 2005 and this is the 12th edition. We cover every market in a sample of 1,000 clients to give us the result. The whole [surveyed] population is bankable, which is quite meaningful.
The latest survey addressed retirement and the health factor that comes with retirement. A couple of things were alarming in Egypt, and also, somehow, in the United Arab Emirates (UAE). According to the survey, many working age people are also optimistic about life during retirement, expecting that their relationships, social life and standard of living will improve. However, such aspirations might be at risk because alarmingly, 75% of the respondents above the age of 45 years old were not comfortable with retiring and 70% of pre-retirees cite a lack of understanding about how much to save for healthcare costs as a main barrier to retirement planning.
Compared to the global average of 65%, in Egypt only 15% of pre-retirees aged above 45 years would like to retire in the next five years. Of that, over one in three (39%) said they wanted to retire as work had a negative impact on their mental and/or physical health, and one in five (20%) said they are tired of the routine. Only a quarter of Egyptians get regular medical check-ups, and less than one-third (32%) are physically active.
Respondents were not comfortable with retiring for specific reasons, predominantly financial. They wanted to be ready before they make that decision. The respondents were not sure what expenses would be like. Usually, an employee is somewhat covered [with health insurance] during employment, but after that period the employee is left on their own, and health and subsequent expenses are not predictable.
The HSBC survey found that only five in 10 retirees in Egypt rate their health as good for their age, and seven in 10 pre-retirees are unable to predict how much they are likely to spend on healthcare in retirement. More than half (55%) of working age people believe that poor health will make saving for their retirement more difficult.
There is a need to think and plan things ahead of time. People need to look into their health plans ahead of time. We suggest a couple of tips, including starting financial planning early, especially when you do not know what the future holds. The second tip is to plan for a long-term retirement because, again, you do not know how long you live and how much money you will need. Don’t plan for the average; over plan. The third thing is that people need to work on their health perceptions and be cautious, especially given that around 63% of the retirees and pre-retirees say that something prevents them from leading a healthier style. The fourth tip is that people should consider how their healthcare needs may change in retirement and consider their financial obligations throughout retirement and make sure that potential healthcare needs are included in your plan
With regards to those findings, would you tailor some services for clients?
We do have some products that address retirement. We are planning to introduce more products on the wealthier side [high profile clients]. Wealth is a big priority for HSBC globally and we just reinstated wealth here in Egypt in 2015. The products are Alliance [insurance company] insurance products.
Basically, they cater to three needs. They are all savings type products wrapped in insurance policies. You save a specific amount that is suitable for your objectives and your needs. We reach a number and the need and then work backwards to see what the client needs to do in order to reach that goal. It is a real open discussion that could lead to either minimising your cost or saving more or repositioning your saving into certain areas. It is a model that is tested and sophisticated.
The product itself depends on the provider [the client] but what differs is the amount, the length [time frame] and the insurance company.
Was this product launched in Egypt?
It was launched and this year we are accelerating discussions with clients, especially our Premier customers. Previously we focused more on the cards and loans for our retail banking customers. This continues to be a priority and we continue to launch products, while wealth was a need that was predominantly managed by the customer, either through investing in certificates, the stock market, or any other wealth solutions. This puts more structure into the savings and aligns them to the specific need of the individual.
Do you have a specific target that you want to reach?
Yes, we see the demand elevating and the interest increasing. The more you talk about it [the product], the more outcomes follow.
With policies introduced to the market by the Central Bank of Egypt and the inflation rate predicted to rise, how will the product that you offer be affected? Do you take into account inflation and devaluation when you create products?
Wealth is something that caters to high net worth clients. These clients belong to a certain income group and that is where we can add value. Nevertheless, it is also important to cover the other segments and we are planning to do that in stages.
First we cover our [HSBC] Premier clients who are helped by dedicated relationship managers who offer them financial services advices. For every 250 clients we have a dedicated relationship manager who is fully aware of their financial situation. We also offer financial advice to other segments on a need basis.
No matter what the circumstances are—inflation, hardship or currency—the need is still there. It is something that has always been there and will continue to be there. You need to have savings and a long term plan in mind because eventually you [the client] will have to address it.
How much did the retail portfolio grow during 2015?
We have seen growth in our asset lending book in 2015, reaching 16%. On the liability front, in the fourth quarter of the year, we saw a drop but it was purely because the saving certificates that were launched in the market. We do have a big retail liability book and it is very healthy. Actually, our target is to grow our asset [lending] book even further.
What are the new retail products that you are offering?
We launched the car loans last year. We are lining up a few other products on the lending side. But we are still in the development stage during this year. We might stage it but it is something we are evaluating and it is something that our customers need. We are introducing new packages for clients depending on the companies they work for and the segment they represent.