Survey of HNWIs and UHNWIs reveals a large share still don't have an advisor
Some of the wealthiest investors are not working with a financial advisor despite the growing risk of market volatility.
But a new survey of high net worth individuals (HNWI) and ultra-high net worth individuals (UHNWI) has discovered what’s important to them and how financial advisors can attract and better serve this elite cohort.
The fifth annual Advisor Authority report from Nationwide Advisory Solutions reveals the results of a Harris Poll survey of nearly 1,600 registered investment advisors, fee-based advisors and individual investors in the US.
For clarity, HNWIs have investible assets of at least U$1 million while UHNWIs have at least $5 million.
Making sense of today’s complex markets and addressing the top concerns of these investors is the key to gaining their trust and earning their business.
With 27% of HNWIs and 22% of UHNWIs not having an advisor, the report highlights a substantial opportunity for advisors to gain their business.
"While managing taxes and protecting assets remain among their top financial concerns, High Net Worth and Ultra High Net Worth investors need help to identify potential blind spots and bridge the preparation gap, especially in times of uncertainty. More affluent investors say a top benefit of working with an advisor when markets are volatile is staying focused on long-term goals," said Craig Hawley, Head of Nationwide's Annuity Distribution.
What wealthy clients want
Having more wealth does not mean having a brighter financial outlook and the survey found a decline in sentiment among wealthy investors amid growing concern about the markets, economics, and politics.
However, UHNWIs showed greater optimism thanks to US tax cuts and the likelihood of reduced regulation for business.
Market volatility is a key concern with wealthy investors set to lose more if the market tumbles. While taxes are the top concern of respondents (38% for HNWIs and 33% for UHNWIs), protecting assets runs a close second (37% and 33%).
Despite this concern, around a quarter of wealthy investors aren’t sure if they have a strategy to protect their assets but they generally do have protection against market risk.
Retirement income
Again, while the wealthiest individuals may not appear to have the same worries about their retirement income as the wider population, it is a top financial priority and many are not sure which strategies will provide a reliable income source in their later years.
UHNWIs are more likely that HNWIs to have a strategy to ensure their savings outlive them, but this is high for both – 93% for UHNWIs and 84% for HNWIs. The wealthiest group are also more likely to use a diversified portfolio of income generating annuities.
Holistic advice
The survey also reveals that wealthy investors want a holistic approach to the advice they receive.
And they say that the single most important reason for working with a financial advisor is feeling more confident in their financial future.
