The Investment Trends HNW Investor Survey 2022 shows that Australia’s wealthiest are less inclined to use the services of an adviser compared to the previous year. In fact almost 60% of HNWs (investors with over $1m in investable assets*) did not engage with an adviser in the last 12 months. Sixty per cent of HNWs indicated they would prefer to use an adviser simply to validate their investment decisions or access specific investment opportunities.
The need for portfolio construction and asset allocation advice appears to be waning with many HNWs confident in their own ability to manage their wealth. Despite (or because of) the reluctance of some HNWs to use advisers the proportion expressing unmet advice needs is still substantial.
Inheritance and estate planning (34%) and tax (32%) are the most common areas that HNWs acknowledge they need advice, while retirement planning is a growing concern with 28% of HNWs noting this, up from 24% in 2021. Last year the need for support on ETFs and ESG factors were higher, indicating that advice on these matters appears to be better addressed.
The HNW investor segment is broad, encompassing the emerging affluent with $1m in investable assets up to the ultra HNW with $70m or more in investable assets*. And whilst inheritance and estate planning is the main advice need for all HNWs there are nuances in the top 3 needs across each segment. The emerging affluent are looking for assistance with investing for regular income and retirement planning, with the ultra HNWs seeking support with tax reduction strategies and identifying undervalued assets. This suggests a one-size-fits-all approach may not be suitable and understanding these subtle differences could help advisers better support the varying needs of HNW investors.
Top 3 unmet advice needs by investment segment
|$1m-$2.5m||$2.5m - $5m||$5-$70m|
|Inheritance and estate planning||Inheritance and estate planning||Inheritance and estate planning|
|Investing for regular income||Strategies to reduce tax||Strategies to reduce tax|
|Retirement planning||Investment strategy review||Identifying undervalued assets|
The main barriers to seeking advice for these needs is a preference for episodic engagement (39%) or a self-directed approach (38%). Perceptions of advisers’ conflict of interest and high costs continue to increase.
Within this context, it is incumbent on advisers seeking to attract and retain Australia’s most affluent to develop a customer value proposition that focuses on supporting the advice needs of this segment and demonstrates the value of their advice. Steering the conversation to areas where HNWs feel they need support, with less emphasis on discussing investment strategy and portfolio construction can help to build trust with the client and form the foundation of an ongoing and successful relationship.
*Investable assets refers to - net wealth clear of debt, excluding own home, business and super (but including SMSF assets). The research is based on a quantitative online survey of 1,387 HNW investors conducted by Investment Trends between June and July 2022.
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- their investment preferences
- their outlook for the market
- their attitudes to advice
- the key areas they feel they need advice in and
- what you can do to better support them.