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Advisers urged to keep up with shifting preferences of HNW investors

Advisers urged to keep up with shifting preferences of HNW investors
By tzhang
13 April 2021 — 1 minute read

There has been a sharp increase in high-net-worth investors who are open to receiving financial advice, presenting a timely opportunity for advisers to better demonstrate their value, according to a recent report.

Research firm Investment Trends’ 2020 High Net Worth Investor Report, the annual study of Australia’s wealthiest investors (defined as those with over $1 million in investable assets outside their own home, business and non-SMSF super), reveals that there are 485,000 HNW investors as at September 2020. This is a figure similar to 2019 (490,000) but significantly larger than 2018 levels (460,000).

“The size of the Australian HNW population remains resilient despite tough market conditions at home and abroad. While the uncertain investing climate had minimal impact on market size, it has profoundly impacted the attitudes and preferences of HNW investors towards investing and advice,” King Loong Choi, associate research director at Investment Trends, said.

When it comes to their views about financial advisers, the report reveals a significant growth in the “validator” segment, described as those who would consider using an adviser because they value a second opinion, for their access to a wide array of investments and their technical skills.

“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, the positive shift in attitudes towards advice providers has not led to greater uptake, according to the report. Over the last 12 months, the use of financial planners (19 per cent), full-service stockbrokers (15 per cent), wealth managers (7 per cent) and private banks (5 per cent) 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 uncertainties caused by the pandemic have 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.”

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Tony Zhang

Tony Zhang

Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.

Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.


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