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The rise of high-net-worth advice ‘validators’

Australia’s growing population of high-net-worth (HNW) investors are increasingly looking to access the expertise of financial advisers, according to new data from Investment Trends.

The percentage of high-net-worth validators open to financial advice has risen to 56 per cent from 40 per cent over the last 12 months, opening a “unique opportunity” for advisers to “proactively demonstrate value”.

“The uncertainties caused by the pandemic has prompted many HNWs to reconsider how they view professional financial advice, which presents a unique opportunity for advice providers to demonstrate their value-add – through their technical expertise, guidance and proactive communications,” said King Loong Choi, Investment Trends associate research director.

There are now 485,000 HNW investors as at September 2020, similar to 2019’s figure of 490,000 but significantly larger than 2018 levels of 460,000. The ‘validator’ segment are those who would consider using an adviser to get a second opinion or for their technical skills and access to a wider array of investments.

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“The last 12 months saw a large shift in the perceptions of advice among HNW investors, with a sharp increase in ‘validators’ who are open to receiving financial advice (56 per cent, up from 40 per cent in 2019) and a corresponding fall in ‘self-directed’ HNWs who prefer making decisions on their own (34 per cent, down from 49 per cent),” Mr Choi said.

However, this positive view has not yet led to greater uptake of advice. Over the last 12 months, the use of financial planners, full-service stockbrokers, wealth managers, and private banks has largely remained static.

“The disjoint between the positive views towards advice providers and the current muted uptake of advice highlights how advice providers need to rethink their value proposition and delivery model,” Mr Choi said.

The rise of high-net-worth advice ‘validators’
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