How to work with HNWIs

Praemium chief strategy officer Denis Orrock has shared how advisers can work with high-net-worth investors as a new report finds 45,000 people have entered the $2.5 million–$5 million bracket.

In the latest Advising Australians report from Praemium and Investment Trends, it said 45,000 individuals entered the bracket that caused total investable assets to rise dramatically from $560 billion in 2022 to $700 billion.

This compared to assets consistently hovering between $530 billion–$590 billion since 2019.

However, many of the new high-net-worth individuals are likely to be unadvised affluent individuals, presenting an opportunity for financial advisers.

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“These new graduates are more likely to be unadvised investors who acknowledge a need for professional guidance. This creates a striking opportunity for advice providers to cater to this growing and lucrative segment,” the report said.

“As these individuals enter higher wealth brackets, they often lack the comprehensive financial education and professional guidance needed to navigate the complexities of their newfound wealth.”

Praemium said the average age of people in this bracket is 66 – 69 per cent have a self-managed super fund, 51 per cent own their own business and 50 per cent are retired. 

Speaking to Money Management, Orrock discussed how advice firms could up their game when it comes to servicing the new market.

The chief strategy officer said: “It can’t be a cookie cutter approach; they want to spend a lot of time on establishing trust and understanding their investments and how they work. They also want to see how the adviser will fit in culturally with their network, such as their lawyer and their accountant, as a collaborative approach is needed.

“They demand a higher standard of personalised service, and they are used to receiving that service and that experience. They also want more digital engagement.”

The report also found 39 per cent of high-net-worth investors said inheritance and estate planning were unmet advice needs for them. This was cited as “a pressing need” for them, up from 34 per cent in 2022. 

The concerns around retirement were a common theme, with retirement planning and intergenerational advice also named as unmet advice needs. 

Earlier this week, AMP found the majority of people approaching retirement said they found it “too complex” to navigate.

“The need for estate and inheritance planning will only grow as the population ages. Advising on this can help advisers build a trusted relationship with clients and their family, it’s about generating trust,” Orrock said.

“Australia can learn from the US and UK in how to approach this, they have been doing it for longer and they are focused on offering a holistic advice service for their customers.”\\\