Wealthy investors spurning advisers
Fewer high-net-worth (HNW) investors are using financial advisers, according to research conducted by CoreData.
The research also pointed to the increasing willingness of HNW investors to consider investing in industry superannuation funds.
The CoreData research found the percentage of HNW respondents agreeing with the statement ‘I have my own financial planner’ fell from 37 per cent to 31 per cent over the past 12 months.
In the 2009 survey, 11 per cent of respondents identified with the statement: ‘I used to have a financial planner but not any more.’ This year that figure rose to 20 per cent. The number of HNW investors occasionally consulting with a financial planner also fell.
CoreData principal Andrew Inwood said the latest research showed “the message of industry super funds was resonating with the wealthy and leading to an increased interest about, and investment in, industry superannuation funds”.
The number of HNW respondents saying they were ‘already in an industry super fund’ rose from 12 to 18 per cent over the past year, while the number of respondents saying they ‘would consider an industry fund’ rose from 17 per cent to 28 per cent. The percentage of HNW investors who said they would ‘not consider an industry super fund’ remained high, at 72 per cent, although this had fallen from 83 per cent in 2009.
Inwood said the value that advisers can add to clients was being challenged.
“It’s very clear that the old role of providing value through ease of investing, basic planning and access to products and services has gone. High-net-worth investors now think they can provide this service for themselves.”
He added advisers were struggling to demonstrate the value of their services to clients.
“Many of the high-net-worth investors, having abandoned the idea that advice can add value, are looking for what they perceive as the cheapest option to provide generic services — and they are finding that in industry super,” Inwood said.
“It’s important to remember that one of the most strongly correlated things with wealth in Australia is owning all or part of a business — so a lot of these people are exposed on a regular basis to the performance, cost advantages and reporting of the industry funds,” he said.
Inwood added there was “clearly a group of advisers who managed the global financial crisis and their relationships very well — but they appear to be a minority”. He said that despite the need for advice in the HNW segment, the “vast bulk of advisers, it appears, were unable to display what they offered in terms of advice, planning, activity and communication”.
For the purposes of the research, HNW investors were classified as those with more than $1 million in investable assets outside of property and superannuation.
The research was based on 1,412 HNW investors and was conducted on February 4, 2010.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
