HNW investors shunning shares for cash

High-net-worth investors have become increasingly risk-averse in the wake of recent share market turbulence, with a majority now naming cash as their preferred investment, according to research conducted by CoreData.

CoreData surveyed 1,700 Australians with investment assets of more than $1 million between November 2009 and February this year.

CoreData principal Andrew Inwood said there had been “significant growth in the number of high-net-worth individuals leaning towards ultra-conservative investment decisions”.

The research found 43 per cent of those surveyed registered as risk-averse in 2009, compared to only 11.5 per cent in 2007. Inwood said the change in the risk profile of these investors was a clear reaction to the losses they suffered during the recent market falls.

Core Data said more than 50 per cent of the high-net-worth individuals surveyed rated cash and cash-like assets as the best investment option, with property and Australian and international shares falling behind in preference.

More than half of those surveyed lost between 21 per cent and 30 per cent of their investment wealth during the financial crisis.

Less than 40 per cent of the investors surveyed have an ongoing relationship with a financial adviser. CoreData pointed to an “overall” satisfaction with the services being offered by planners, while also saying there was a “relatively poor” level of satisfaction regarding planners’ investment performance. CoreData said close to 70 per cent of high-net-worth investors would change providers if their investment performance continued to deteriorate.