The majority of high net worth (HNW) and ultra-HNW Australians are not turning to financial advisers, a report by Crestone Wealth Management found.
According to the study, only 20.5% rely on a trusted professional to deal with their wealth.
Over a quarter (26.8%) said they seek reliable information to support their investment decisions, 23.7% ask financial advisers for confirmation, 20% do things on their own, and 8.9% don’t manage their wealth at all.
Unsurprisingly, Crestone found that only 23.1% of HNWs and UHNWs have an ongoing relationship with an adviser.
Among the remaining wealthy:
- 15.8% don’t have a dedicated professional but will consult one from time to time,
- 5.9% ended their relationship with their adviser recently,
- 21.6% have stopped using one for a while, and
- 33.5% have never used a professional to manage their wealth.
Finding value
“Our research reveals a significant financial advice gap: startlingly, most HNW and UHNW individuals have never consulted a financial adviser,” said Clark Morgan, vice chairman and head of strategy and development at Crestone.
“And if they have, many ended the relationship because they saw no value in it.
“We see a clear opportunity to better engage with HNW and UHNW individuals to help them become more effective in managing, securing and growing their wealth for generations to come.”
Safety first
In addition to few consulting financial advisers, the Australian firm found that wealthy investors are incredibly defensive in their portfolios.
Over 81% of the respondents admitted to having cash allocations, followed by 56.4% holding Australian equities and 41.6% with direct residential property featuring in their investments.
Source: Crestone Wealth Management/CoreData
“This report discovered that instead of holding well-diversified portfolios, the majority of HNW and UHNW individuals concentrate their wealth in just three asset classes: cash, Australian equities and residential property,” Morgan added.
“This lack of diversification poses significant risks to both groups’ wealth. Especially given that most describe themselves as cautious and unwilling to tolerate more than moderate investment losses.
“Both residential property and Australian equities face significant headwinds in 2019 and beyond. By continuing to go it alone without a financial adviser, these investors remain vulnerable to the volatility impacting these asset classes due to domestic and international economic and geopolitical uncertainty.”
