More high net worth individuals (HNWIs) were using advisers for their investment decisions, particularly financial planners, but pressure is still on advisers to demonstrate value, Investment Trends research showed.
The 2015 High Net Worth Investor Report showed adviser usage among HNWIs had increased to 42 per cent, up from last year’s 40 per cent, with HNWIs using at least one adviser as a source of investment advice.
However, advised HNWIs were still more likely to have unmet advised needs than their unadvised counterparts, and the 58 per cent who did not seek investment advice also represented an opportunity for accountants, financial planners, full-service stockbrokers and private banks to tap into this segment.
Investment Trends senior analyst, Irene Guiamatsia, said the biggest barrier to the take-up of advice was preference was control, followed by doubt in adviser expertise.
“The onus is on advisers to rethink their approach to service delivery. It is about engaging investors in a way that keeps them at the helm of the decision making process, whilst demonstrating expertise and sophistication,” Guiamatsia said.
The study of 2,998 Australian millionaires holding $11.5 billion in investable assets also showed that despite a sizeable shift away from cash reserves and towards growth assets in 2012/13 among HNWIs, this had remained stagnant since then.
Their cash reserves had reduced from 20 per cent to 17 per cent of their portfolio in 2012/13, but as of October 2015, the typical HNWIs held 16 per cent of their wealth in cash and term deposits.
However, the group was showing increased ‘readiness’ to reinvest their cash reserves, compared to a year ago, and believe 42 per cent of their cash reserves to be ‘excess’ or ready to be invested once the volatility settles, up from 37 per cent a year ago.
