Lack of advice among millionaire investors' biggest mistakes

Reliance on historical returns, not seeking advice and a lack of diversification are the top investment mistakes made by millionaires, according to a survey.

The survey carried out by financial advisory firm deVere Group queried 752 investors with investible assets worth over £1 million ($1.83 million) from across the world.

The top cited was a focus on historical returns (38%), followed by not having sought advice (35%) and the third was lack of diversification (21%).

Nigel Green, deVere chief executive and founder, said it was encouraging that seeking advice was important to the success of millionaires maintaining wealth.

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“…It shows that DIY investing and not having a regularly reviewed plan is, typically, a path full of costly pitfalls,” Green said.

“The lack of diversification was in some ways bound to make the top three. Why? Because it is universally regarded as an investor’s best tool to mitigate risks and capitalise on opportunities that arise.”

Green said it was notable that high net worth individuals’ biggest mistake was reliance on historical returns as guidance.

“To me, this suggests that wealthy investors are paying attention to how the world has changed dramatically this year and, therefore, investment strategies need to adapt and evolve too in order to reflect the new era we’re living in,” Green said.

“With fundamental shifts in economies and the markets, the often-quoted industry phrase ‘past performance is not a reliable indicator of future performance’ has perhaps never rung more true than it does today.”