New research has pointed to an interesting trend among high-net-worth investors (HNWs) — their increasing tendency to go it alone when it comes to deciding where to put their money.
Namely, according to new research by Investment Trends and Praemium, while HNWs have unmet advice needs, few are seeking advice from a financial adviser to meet them.
The 300-page report, based on a survey of 7,500 investors, revealed that 60 per cent of Australian HNWs only turn to an adviser to validate their own investment decision, up from 52 per cent last year.
Interestingly, the research found that 39 per cent of HNWs prefer to seek advice only when they need it, while 38 per cent believe they can manage their own financial affairs.
Moreover, 33 per cent of the surveyed investors said “advisers’ conflicts of interest” was the key reason they choose to avoid advice, while 31 per cent found advice too expensive and 30 per cent said they lack confidence in advisers’ expertise. Additionally, previous poor experience with financial advisers was cited by 28 per cent of respondents as playing a key role in their decision.
Of those who did receive advice, the most popular source of advice was a financial adviser (15 per cent, down from 18 per cent in 2021), accountants (9 per cent, unchanged from last year) and full-service stockbrokers (8 per cent, down from 9 per cent last year).
The research also revealed that HNWs desire to have a single source of wealth through a digital experience yet currently 53 per cent track their wealth via a spreadsheet.
Australia boasted 625,000 HNWs in 2022, controlling $2.82 trillion in investable assets, 69 per cent of which will be passed on to the next generation.
Included in the top reasons that inspire HNWs to turn to advisers are inheritance and estate planning; strategies to reduce tax obligations; retirement planning; and investment strategy reviews.
Commenting on the research, Anthony Wamsteker, CEO of Praemium, said the need for advice in managing this intergenerational wealth transfer is significant.
He highlighted “some real opportunities for advisers to deliver an advice service that provides the collaborative relationship these investors are looking for and focuses on meeting the strategic needs of high-net-worth investors, particularly around the intergenerational transfer of wealth”.
“The challenge for platform providers like Praemium will be to continue to produce technology solutions that provide advisers with tools that clients value and improve both adviser performance and client confidence”.
The supply demand imbalance for advice is way outta whack, advisers win, by a mile, so who cares why people who don’t want our advice dont want it…
my HNW’ers are absolutely able to manage their own finances – and probably would be more efficient without me due to no advice docs being required. The difference is they are smart enough to know where their time is best spent. Travel, enjoy time with family or stay on the golf course while occasionally emailing me with a question or returning a docusign pdf vs actively researching and making investment decisions. I see HNW prospects often with a portfolio of every highly marketed EFT or managed fund around, and their performance is at best slightly better than a well diversified portfolio based on sound investment decisions.
Yes, HNW clients want to do it themselves. Just like the 70 YO widow who lost about a million in the SMSF through fraud on ASIEX. The fraudsters had intercepted the mail and redirected the dividends to another bank account. Or the parents of a lady who rang me saying her elderly parents were destitute but could not get Centrelink age pension because they had $1.8 million in their SMSF. Problem was they invested in an offshore unlisted international share scheme and the money no longer exists except on paper and in the minds of Centrelink assessors. Turns out their fee for doing it themselves was $1.8 million. If people want to do it themselves, good luck to them. You dont know what you dont know and I have no time to concern myself with people who think they know better.
Yes, loads and loads of stories like that out there.
long post for someone who doesn’t have time to concern themselves with it..
That or a simple spreadsheet that clients can understand, while advisers ensure their clients pay less tax, have a better quality of life and free up their clients time.