High net worths increasingly using advisers

Increasing use of financial advisers by high net worth investors has seen them increasingly diversifying their investment portfolios, according to new research from new Crestone Wealth Management.

The latest Crestone State of Wealth report which is based on polling of high net worth and ultra-high net worth individuals found that while their three top asset classes have not changed, there has been a trend towards diversification.

Those three top asset classes are cash, domestic equities and residential property.

Discussing the findings, Crestone’s head of Strategy and Development, Clark Morgan said that in the face of increased volatility in markets, HNW and UHNW investors had responded with diversification – something potential driven by an increased uptake in financial advice among wealthy Australians.

“The wealth paradox is still real, but HNW and UHNW individuals are learning. As we touched on in the previous report, it’s often assumed that HNW and UHNW individuals achieve their wealth by being risk takers. While some do have higher risk appetite than others, the majority have remained wealthy by being relatively cautious,” he said.

“But they still rely on what’s familiar. Arguably their portfolios are still not as diversified as one would like, with still a strong reliance on cash, Australian equities, and residential property, but it is trending positively in correlation with further engagement with financial advisers.”

“We have seen this behaviour in action as many are diversifying or planning to diversify their investments into other asset classes after a volatile period. We also see the majority of HNW and UHNW individuals are willing to deviate from their initial investment plan,” Morgan said.

He said the desire for trusted and independent financial advice remains strong.

“The research demonstrates we are seeing improved financial behaviours, and increased diversification and better uptake of documented investment and wealth planning. We’re also seeing an increased interest and engagement with professional financial advice.

“The pandemic and increased financial risk may have been the catalyst for many to seek help with their wealth management,” Mr Morgan said.