Investment Trends releases its High Net Worth Investor Report each year. It sheds light on the wealthiest investors of Australia. An article on Professional Planner talks about the highlights of the report that drew responses from 2,998 millionaires (cumulatively holding $11.5bn in assets).
Halt in number of High Net Worth Individuals
The report says that the turbulence present in the money market has stunted the growth in number of high net worth (HNW) individuals. Also, the HNW investors are quite willing to let go of their cash but feel that they are short of good opportunities to invest. The report further says that the investors are using advisers in many cases but the advisers feel they are under the hammer- required to show value (each time, every time).
Value erosion for HNW investors
Over the year that went by, the number of HNW investors was steady at 440,000. In 2014, it was 445,000. Investors of this nature usually have property and direct shares in their portfolio. The Australian real estate has kept doing well but the decline in fortune of commodity and the share market has resulted in value erosion for the HNW investors. From $1.57bn in October 2014, the net worth of HNW investors has come down to $1.55bn.
Investors do not mind parting with their cash
The investors are not averse to parting with their cash. They are quite keen to keep reinvesting their reserves. If the volatility vanishes from the market, HNW investors feel ready to let their cash be used for an investment opportunity. 42% of them feel their cash reserve is on the ‘excess’ side. An year ago, this number was 37%.
A recovery in number of investors seeking professional advice
Since sliding down last year, the fortunes of advisers have recovered. 42% HNW investors (as against 40% posted an year ago) use a minimum of one adviser for their portfolio. The article says that 58% of HNWs have not sought any investment advice and this means that the fraternities of financial advisers, accountants, and private banks have something to look forward to.
Those who have not gone for advice feel that control over investment is the key; and it is diluted once an adviser enters the scene. Also, some feel, that the investment advice is not up to the standards needed. It is for the advisers to regenerate a thoughtful strategy- one that has takers amidst the HNW investors. The idea is to demonstrate value, quality, and expertise without making the investors feel that they are not heading the ship.
You can read the original article here.
Greater investor awareness has brought us to a point where nothing short of expert advice works for them. Also, they are in a better position to sift wheat from chaff. They know when advisers are talking meaningfully (oriented towards the investment strategy) and when they are passing fluff.
Market’s volatility presents a two-sided picture
The dynamics of money market has changed and the existing volatility in particular has meant that the investors are more vulnerable. On one hand, this vulnerability opens them to advice but on the other hand, it makes them more apprehensive about the suggestions. After all, they want to win over the volatility, not go down with it. One thing is clear- the role of financial advisers will be under intense scrutiny in months to come.
