Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Wealthier investors open to advice
More high-net-worth (HNW) investors are open to receiving financial advice than a year ago, but they are yet to do so, according to the latest report from Investment Trends. There were an estimated 485,000 such investors on September 30 last.
The report, the 13th in the firm’s annual series, is billed as the largest of its kind in Australia. It samples HNW investors with more than $1 million in investable funds, defined as money outside of their own home, business, and non-SMSF super.
While slightly down on last year’s 490,000 estimated HNWs the total was still comfortably ahead of 2018’s 460,000. King Loong Choi, the report’s lead author, said the HNW population had remained resilient despite tough market conditions.
But while the uncertain investing climate had minimal impact on the number of investors in the HNW category, it had “profoundly impacted” their attitudes and preferences towards investing and advice, he said.
Choi, the firm’s associate research director, said: “The last 12 months saw a large shift in the perceptions of advice among HNW investors, with a sharp increase in ‘validators’ who are open to receiving financial advice (56 per cent, up from 40 per cent in 2019) and a corresponding fall in ‘self-directed’ HNWs who prefer making decisions on their own (34 per cent, down from 49 per cent).”
The ‘validators’ are those who say they would consider using an adviser – be it a financial planner, full-service stockbroker or wealth manager – because they value a second opinion, believe they offer access to wider choice of investments and/or their technical skills.
The rub in the news, however, is that the research did not discern any greater uptake in use of advisers, which had “largely remained static”. In the category, 19 per cent used financial planners, 15 per cent stockbrokers, 7 per cent wealth managers and 5 per cent private banks.
“The disjoint between the positive views towards advice providers and the current muted uptake of advice highlights how advice providers need to rethink their value proposition and delivery model,” Choi said.
Investment Trends surveyed 2,578 HNWs for the report, collectively holding about $2 trillion in investable assets.
