According to Praemium, high-net-worth clients “take a proactive approach to allocation of their capital”, with its research indicating 96 per cent of clients are “highly involved” on investment allocations with their adviser.
“It’s not a passive relationship, as our survey would agree, it is a partnership,” said Matt Walsh, head of private wealth at Praemium.
“It’s not about the adviser being prescriptive and telling the client what to do. It is about co-creating strategies and also helping the high-net-worth feel in control.”
This level of attention given to their allocations means that for advisers, engaging and ‘novel’ investments become necessary to maintaining client engagement. Alternative investments, according to Praemium research, are an important tool in maintaining a higher level of client engagement.
Alternative assets or private markets are gaining momentum among advisers and offer clients that can afford them broader diversification and shield them against some of the growing uncertainty in global and domestic markets.
According to Praemium’s research, 56 per cent of clients who have investments in alternatives have an ongoing relationship with their adviser, opposed to only 36 per cent having the same relationship when looking at those without alternative assets.
Additionally, clients with alternative investments showed high levels of engagement with their advisers and their investing activities, with 62 per cent being highly engaged and a further 35 per cent being reasonably engaged.
The inverse was true for non-alternative investors, with only 37 per cent being highly engaged, and the majority (54 per cent) being only reasonably engaged.
“The data is clear. The high-net-worth market is actively seeking alternatives. And those [advisers] who are engaged with them have a deeper relationship with their advisers. You only have to look at what’s happening more broadly in the marketplace with the big asset managers focused on this high-net-worth portion of the market,” Walsh said.
However, speaking in the past on an ifa webcast, Walsh did highlight that platforms are still lagging behind on alternative offerings in their managed accounts.
“At the moment, the platforms are only really solving for liquid alternatives, which has got daily pricing. I think the industry’s probably got a little way to go to solving semi-liquid alts and how you could cater for longer lock-up alternatives,” he said at the time.
“There are a couple of things that the platforms need to solve for. Part of it is technology, and the other part is the trustee overlay. I think we have got a little bit of work to go from there.”
