#Point of view
Reinventing the savings landscape
Stormy weather has lashed France in recent weeks, creating an electric atmosphere in more ways than one. Hot-button issues abound and reforms rumble on, prompting some commentators to predict that a warmer economic climate may lead to natural risks.
An opinion poll published Thursday by Le Figaro Economie serves as a reminder to French political leaders that people are pragmatists. Fifty per cent of the respondents said pay was still their main incentive for working, an opinion voiced more strongly by men than women (56% versus 44%). The second motive, inevitably, is work/life balance.
Workers are worthy of their wages, says the old proverb. And the higher the wage, the greater the motivation. That’s the key takeaway from the “Workforce View in Europe 2018” survey published by Automatic Data Processing Inc. Unsurprisingly, ADP’s main finding is that career fulfilment hinges on pay. The next is what French workers intend to do with the money they earn. How will they spend or invest it? One of the biggest surprises, which has confounded the dire forecasts from financial specialists over the past year or more, is that life-insurance investment is back in favour. According to Le Figaro, net inflows – deposits minus withdrawals – reached €2 billion in April. “Since the start of the year,” says the paper, “households have deposited a net €7.5 billion on their insurance contracts, equivalent to the total invested for the whole of 2017. Outstanding investment in life insurance is nearing the €1.7 trillion mark (€1.697 billion).
The main trend observed over the past 12 months is that savers are turning increasingly to unit-linked equity contracts, which, though riskier, offer higher potential returns than euro-denominated funds. “Since the beginning of the year, €1 billion per month has been invested in equities,” says Bernard Spitz, President of the French Insurance Federation (FFA). It should be noted that the key concern for French savers at the moment is how to renew their investment strategy. Households who last year invested heavily in property now want to build up their savings again.
Significantly, 83% of French people think they will be short of money when they retire. Their top priority, therefore, is to put a roof over their heads, and then to earn additional income. That two-phase strategy has been in evidence in recent months. People are taking a close look at workplace savings and reconsidering the stock market. They are mobile and active, and they know how to diversify. They have become champions in investment products. So, to help them, we need to understand these investments, be creative and reinvent the savings landscape.