Rapid HNW expansion poses ‘significant’ advice opportunity
The number of Australian high-net-worth (HNW) individuals has grown by nearly 9 per cent from 2023, spelling positive news for financial advisers.
Praemium, in conjunction with Investment Trends, has released its 2024 High Net Worth Investors report surveying more than 1,500 HNW investors.
These individuals are defined as those with at least $1 million in investable assets, meaning net wealth clear of debt.
The research discovered that Australia’s wealthiest segment continues to grow and has reached a new high in 2024. Some 690,000 individuals are now classified as HNW, Praemium and Investment Trends found, representing an 8.7 per cent rise from 635,000 in 2023.
Collectively, these investors manage $3.4 trillion in investable assets, which is up from $2.98 trillion in the previous year.
The growing HNW segment, who are increasingly demanding specialist advice, indicates a clear opportunity for advisers looking to service a greater number of wealthier clients.
Recent findings from Investment Trends revealed that advice firms with a profitability of 40 per cent or more charge upwards of $7,700 per annum, which HNW clients can likely afford.
“When we ask advisers the typical type of client that they’re looking at acquiring, it tends to be those with $250,000+ in assets. If they have a client who doesn’t have that level of assets, then advisers are estimating that it’s probably not going to be worth their while and not affordable for the client as well,” Irene Guiamatsia, head of research at Investment Trends, told Money Management last month.
Key areas in which HNWs are seeking an adviser’s support include estate planning, tax optimisation and investment strategy reviews, the Praemium report explained.
This also includes providing assistance with navigating the looming intergenerational wealth transfer, with a notable portion of the HNW client group, particularly those in the $5–$10 million range, looking for support when passing down funds to younger recipients.
Meanwhile, private market investments have been enjoying rising popularity in recent years, driven by the HNW market.
Praemium’s research found 146,000 HNW investors are currently engaged in private market investments, while a further 32,000 are looking to enter the space within the next 12 months.
“This trend reflects a desire for diversification and higher returns, particularly among ultra-high-net-worth individuals, who are drawn to the potential of private equity, venture capital, and private debt funds,” it said.
Earlier in May, research commissioned by Praemium from CoreData revealed that over 17 per cent of HNW investors are now diversifying their portfolios with alternative assets.
Commenting on the 2024 High Net Worth Investors report, Denis Orrock, Praemium’s chief strategy officer, said: “As these investors grow in number and wealth, the advice and wealth management sector have a significant opportunity to provide tailored, high-value services that address their evolving priorities.
“By focusing on personalised strategies, building collaborative, engaging services, and addressing tax and estate planning needs, advisers can play an integral role in helping clients navigate the complexities of wealth management.”
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Jasmine Siljic
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