Adviser demand increases among HNWs

16-Feb-2016

By Kristen Crawford

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A turbulent year in financial markets in 2015 resulted in the number of Australian high net worth (HNW) investors diminishing from the previous year, while at the same time adviser demand increased, according to Investment Trends.

The research house’s “2015 High Net Worth Investor Report”, which drew on responses from 2998 Australian millionaires, who collectively held $11.5 billion in investable assets, found that while the number of HNW investors had dwindled, those individuals were increasingly open to parting with their cash but struggled to identify good investment opportunities.

As part of that, demand for adviser assistance was slowly growing, although advisers to the group would likely have their work cut out for them, Investment Trends senior analyst Irene Guiamatsia said.

“Advisers are now more than ever under pressure to demonstrate value,” Guiamatsia said.

Adviser usage grew from 40 per cent of HNW clients using at least one adviser as a source of investment advice in 2014, to 42 per cent in 2015.

“There is plenty of room for advisers to lift their offering to their HNW clients since advised HNWs are still more likely than their unadvised peers to have unmet advice needs,” Guiamatsia pointed out.

“Preference for control remains the largest barrier to taking up advice among HNWs, but next comes the question of the adviser’s expertise, which is central to building perceptions of value.

“The onus is on advisers to rethink their approach to service delivery.

“It is about engaging investors in a way that keeps them at the helm of the decision-making process, whilst demonstrating expertise and sophistication.”

The report found the number of individuals who controlled investable assets over $1 million had edged down from 445,000 in 2014 to 440,000 as at October 2015.

“We estimate HNWs’ collective wealth now amounts to $1.55 trillion, down very slightly from $1.57 trillion in October 2014,” Guiamatsia said.

Over 60,000 HNW investors indicated their main source of wealth came from property investments, up from 30,000 in 2013.

As at October 2015, the typical HNW investor held, on average, 16 per cent of their wealth in cash and term deposits compared to 17 per cent the for the previous period, the report found.

“HNW investors are keeping a sizeable part of their wealth in the most liquid form at the moment, despite uninspiring cash rates,” Guiamatsia said.

“Our research indicates this state of affairs could, however, evolve rather quickly under the right circumstances.”

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