The report by researchers Investment Trends found that for the fifth year in a row fewer high net worth individuals (HNWI) were making the use of a financial adviser.
In 2013, just under three-quarters of HNWIs relied on advisers compared with 68% in 2017.
Despite this decline, there is significant opportunity for advice providers to expand their footprint in the HNW segment, as 53% of respondents told researchers they have “unmet advice needs”.
“Right now, HNW investors have a range of unmet advice needs that most often centre around investment strategy and retirement,” said senior analyst King Loong Choi
“HNWs themselves understand that a single adviser may not necessarily possess the expertise to meet all their advice needs, with only 31% believing it is important that one individual provides an all-encompassing service,” explained Choi.
“Advice providers could therefore adopt and promote a team-based approach to more effectively service the HNW market.”
A$100bn on the sidelines
The report also estimates that A$100bn (£57.3bn, $76.7bn, €65bn) is sitting under mattresses and in bank accounts for lack of good opportunities to invest.
Total cash holdings of HNW investors is estimated to be $290bn, with A$100bn considered by HNWs to be ‘excess cash’, or unallocated money because of recent market volatility.
“Almost all HNW investors say they expect to face investment-related challenges in the coming year, and this uncertainty has led to a large build-up of cash holdings,” said Choi.
“Right now, the perceived threat of another global financial crisis and difficulties in investment selection are the two biggest concerns of HNWs.
“Despite their muted outlook, half of HNW investors want material capital growth in their portfolios in the year ahead, and product manufacturers and technology providers play a vital role in assisting HNWs achieve their investment goals.”
HNW investor numbers increase
Researchers found that the numbers of HNW Australians are on a renewed upward trajectory after stalling between 2014 and 2016.
Australia created 10,000 millionaires in 2017, up 2% making a total of 435,000 with at least A$1m to invest outside of their homes, businesses and pensions.
The uptick was led by the top of the HNW bracket who have benefited most from rising share and property prices.
