Investors trust advisers, not regulators
High-net-worth investors appear to have regained confidence in their advisers over the past year, but remain extremely sceptical about the abilities of regulatory bodies tasked with monitoring markets and protecting investors.
That is one of the findings of the latest Capgemini/Merrill Lynch World Wealth Report, which tracks trends in high-net-worth investing around the world.
The report found that 59 per cent of high-net-worth investors surveyed had regained trust in their adviser over the past year, and 56 per cent had regained trust in their wealth management firm.
That was in stark contrast to the 71 per cent of respondents who said they had not regained trust and confidence in regulatory bodies.
But the trust regained in advisers comes with a higher level of scrutiny from high-net-worth clients. The damage inflicted during the crisis has led high-net-worth investors to become better educated and more hands-on with their investments, the report found.
High-net-worth clients are demanding more information from their advisers, higher levels of transparency, more specialised advice and risk-adjusted portfolio management. They’re also demanding improved reporting so they can better understand products, valuations, risks, investment performance and fee structures, in addition to more frequent updates from their adviser, according to the report.
High-net-worth clients are also now increasingly re-validating advice from their adviser or firm through other sources such as peers, the internet and other research alternatives.
Investor caution regarding the abilities of regulatory bodies and the state of the markets is reflected in asset allocation.
The report found high-net-worth investors were still favouring predictable forms of cash-flow, such as fixed-income products — and that they were seeking protection against downside risk and were not rushing to seize risky opportunities. The report found the types of products high-net-worth investors were seeking out were increasingly those they could understand.
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