There is an advice gap when it comes to exchange traded funds (ETFs), inter-generational planning, and identifying undervalued assets for high net worth (HNW) clients, according to a report.

The latest Powerwrap/Investment Trends HNW Investor Report found 58% of HNWs had unmet advice needs.

Over 30% of HNW respondents said they wanted to receive advice about ETFs but were not. This was followed by inter-generational planning (around 28%), identifying undervalued assets (26%), and investment strategy/portfolio review (around 24%).

The report noted that in the uncertain environment, HNW investors were becoming increasingly defensive in their asset allocation and were seeking investments that helped generate stable and predictable yield.

“There is growing demand for access to alternative assets such as infrastructure funds, private equity funds, unlisted managed funds and hedge funds. In 2019 the proportion of HNW investors holding alternative assets was 23%; this is expected to increase to 30% in the next 12 months,” the report said.

The most popular hold/trade HNWs used for investment purposes were listed investment companies (35%), ETFs (34%), real estate investment trusts (REITs) (29%), alternatives (23%), and direct international shares (22%).

On adviser usage, similarly to 2018, 73% of HNWs surveyed used a financial adviser. Almost 30% would use an adviser for access to wider range investors, and around 36% would use an adviser for a second opinion.

However, the report found around 24% of HNWs had stopped using an adviser because of poor outcomes, and a further 22% would not use an adviser because they could make better investment decisions. On trust, 21% of HNWs did not trust advisers and therefore would not use one.

The report noted that the number of HNW investors in Australia had increased by 30,000 to 490,000 in 2019, and controlled over $2 trillion in investable assets.

 

Credit: Jassmyn Goh, Money Management https://www.moneymanagement.com.au/news/financial-planning/60-hnws-have-unmet-advice-needs