HNWIs need strong financial advice
High net worth individuals (HNWIs) need to be more proactive when it comes to managing their wealth and developing respective investment strategies, with a growing desire for trusted and independent financial advice, according to a joint study by Crestone Wealth Management and CoreData.
According to Crestone’s head of strategy development, Clark Morgan, there was currently an ‘advice gap’ in the market, with most ultra HNWIs and HNWIs, identified as those with more than $1 million in investable assets, never having used an adviser.
“The research findings highlight a number of key challenges facing the wealth management industry for 2019 and beyond is more effectively serving the needs of HNW and UHNW individuals,” he said.
“Specifically, there is a need for wealth management firms to focus on areas where wealthy individuals are already indicating a demand for help, including developing investment strategies, the efficient transfer of wealth to younger generations, and diversifying into non-traditional investments and assets class.”
The 2019 State of Wealth Report also found a high degree of these investors revealed a high degree of investment caution and concentrated its wealth among the three main asset classes: Australian equities, cash and property understood as direct residential property excluding their family home.
However, according to Morgan, such an unstructured approach caused the “wealth paradox”, the lack of diversification in the portfolio of the HNWIs represented the major risk.
“We call it the wealth paradox,” Morgan said.
“Many of these investors are inherently cautious, but due to their lack of diversification, they are increasing the risk profile of their portfolios significantly. They are risk-averse risk takers.”
HNW and ultra HNW individuals also required further education around how to better manage their portfolios, including developing optimal investment strategies, managing the efficient transfer of wealth to younger generations and diversifying into non-traditional investments and asset classes.
AUTHOR
Oksana Patron
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
