Number of HNW investors steadies following 2021 surge
High net worth (HNW) investors have decreased to 625,000 in 2022, according to a financial research firm, but their total assets have increased to $2.8 trillion.
Investment Trends released its 2022 High Net Worth Investor Report, which provided a comprehensive analysis of Australian HNW investing behaviour and needs.
The data revealed that the population of individuals who controlled more than $1 million in investable assets had experienced a marginal decrease compared to 2021, yet was still higher than 485,000 recorded in 2020.
Although a decline in HNW investors was present, the total number of investable assets had risen. HNWs collectively controlled $2.82 trillion, an increase from $2.72 trillion in 2021.
Moreover, the report revealed that the number of HNWs who made significant changes to their asset allocation had decreased for the second year in a row.
Just under two-fifths, or 37%, made substantial asset allocation changes to their portfolio during FY22, classed as changing more than 10%.
Irene Guiamatsia, head of research at Investment Trends, noted: “Investors continue to have substantial exposure to property and direct shares, which are key pillars of their investment portfolio. Over recent years, they’ve also significantly increased their allocation to ETFs.
“Looking ahead, HNW investors have recalibrated their investment goals in line with a more subdued outlook for the next twelve months, and increasingly more are looking to protect their wealth against a market downturn.
“Correspondingly, demand for asset classes is evolving, with fixed income emerging as an area of particular interest.”
In consideration of intergenerational wealth transfers, HNWs were projected to hand down nearly $2 trillion in assets to the next generation. This equated to approximately 70% of their total assets.
Investment Trends also recognised that for conversations surrounding intergenerational planning, financial advisers were the main port of call. Tax optimisation and wealth protection were the most pertinent topics of concern, highlighting the importance of wealth preservation between generations.