HNWIs look to robo-advice despite manager resistance
While the numbers of high net worth investors (HNWI) in Australia has climbed steadily over the past 12 months, so has the demand for automated advice models, with wealth managers grudgingly seeing them as part of the future according to a world wide survey.
The number of HNWIs in Australia increased by four per cent to 226,000, a growth that is similar to the United Kingdom, France, Switzerland, Norway, Austria, Canada and Japan according to the Cap Gemini World Wealth Report.
However the number of HNWIs in China grew at 17 per cent to nearly 900,000 while those in India grew by 26 per cent to nearly 200,000 with the report defining HNWIs "as those with investable assets of US$1 million or more, excluding their primary residence, collectibles, consumable and consumer durables".
While the growth of HNWIs may be good news for fund managers and financial planners the report also found growing world-wide propensity among HNWIs to use automated advice services, which was in stark contrast to view of wealth managers.
The survey found that globally 48.8 per cent of HNWIs were attracted to the low cost and convenience of automated services and would consider using them while only 20 per cent of wealth managers stated they believed their HNWI clients would actually use the services.
The survey report stated "wealth managers are sceptical of automated advisory services, noting that they forgo the personal relationships that enable wealth managers to build trust and deliver tailored advice".
It also stated the rollout of automated services was not a passing trend with greater interest from younger HNWIs and that they tapped into the interest for digital and self-service tools but the algorithm based asset allocation models and index and exchange traded fund portfolios had yet to be tested through a bear market.
The report covers 71 countries which account for 98 per cent of global gross national income and 99 per cent of world stock market capitalisation and surveyed 5100 HNWIs across 23 wealth markets in North America, Latin America, Europe, Asia-Pacific, the Middle East and Africa.
AUTHOR
Jason Spits
Recommended for you
Global X has painted a worrying picture for active ETFs in Australia, with investor adoption proving uneven and the popularity of its low-cost index counterparts only growing stronger.
Australian equity ETFs attracted record inflows of $3.2 billion in 1Q25, while heightened volatility led to a decline in flows for global equity ETFs, according to Vanguard.
The failure of a clinical trial by biotech firm Opthea has caused shares in its backer Regal Partners to decline 52 per cent year-to-date and hit its funds under management, quarterly flows show.
GQG Partners has revealed its quarterly flows for the first three months of 2025 were up 5.8 per cent, after a difficult final quarter of 2024 as a result of institutional redemptions.
