Fewer high net worths in Australia

In what represents a sign of Australia’s economic times, the number of high net worth (HNW) investors has actually declined.

The latest Investment Trends research reveals that the population of those who control over $1 million in investable assets is down from its 2021 levels, but up on 2020 with a key factor being their cautious outlook for conditions over the coming year.

However, the things that make HNWs wealthy have not changed – property and direct shares.

The Investment Trends 2022 High Net Worth Investor Report looked at investing behvaiour, product and advice needs and concluded that  as Australia emerges from a period of unprecedented asset value growth, the population of HNWs was 625,000 in 2022.

It said this was down from 635,000 in 2021, but still much larger than 485,000 in 2020. Despite this decrease in overall population, the total level of investable assets largely held steady. Collectively, HNWs control $2.82 trillion, up from $2.72 trillion in 2021.

Commenting on the research findings, Investment Trends head of research, Irene Guiamatsia said Investors continued to have substantial exposure to property and direct shares, key pillars of their investment portfolio.

“Over recent years, they’ve also significantly increased their allocation to ETFs,” she said.

The research revealed that the proportion of HNWs making substantial asset allocation changes to their portfolio had tapered for the second year in a row with just under two in five (37%) HNWs making substantial asset allocation changes to their portfolio in the year to July 2022. 37% changed at least 10% of their portfolio, compared to 41% in 2021 and a 50% record high in 2020.

“Looking ahead, HNW investors have recalibrated their investment goals in line with a more subdued outlook for the next twelve months, and increasingly more are looking to protect their wealth against a market downturn,” Guiamatsia said.

“Correspondingly, demand for asset classes is evolving, with fixed income emerging as an area of particular interest.”

Looking even further ahead, HNWs expect to pass down close to $2 trillion worth of assets to the next generation, equating to around 70% of their total assets. Financial advisers are the main port of call for inter-generational planning discussions, the most pertinent areas being tax optimisation and wealth preservation.

“This annual research always explores in a great deal of detail how product issuers, advice providers and technology providers can best support high net worth investors. This year’s report shines a light on the sharper focus HNW families are placing on wealth preservation across generations,” Guiamatsia said.