Behaviours, desires and characteristics of HNW investors

As the high net worth (HNW) sector expands to almost half a million people in Australia, huge opportunities are opening up for advisers. Despite the pandemic, the total number of Australia’s HNW investors – those with over $1m in investable assets excluding their home – is still around 485,000 and control around $2.02 trillion in investable assets¹.

So, how can your advice business attract and retain them? A starting point is to understand their needs and desires, including what it is they seek most from their adviser.

Who are HNW investors?

There is no core definition of a HNW investor as they are extremely diverse in terms of demographics and social characteristics. But we do know aspects about them that differ to their less affluent counterparts.

Sources of wealth

HNW investors’ main source of wealth comes through their accumulated wages and salary followed by profits from shares/business and property investments.

Attitudes to advisers

According to research by Investment Trends, attitudes towards receiving financial advice have shifted with over half of HNW investors saying they’re now open to receiving it¹.

There is also increased demand for it – more believe they have unmet advice needs in relation to estate planning, investment strategy and investing for regular income. Notably, demand for responsible investing advice has more than doubled compared to last year.

However, this shift in attitude has not led to a greater use of advisers – over the last 12 months 53% used accountants for tax advice, 19% used financial advisers and 15% used full-service stockbrokers¹.

Wealth needs of HNW investors

Generally, HNW investors are looking for advisory services that:

• offer what they don’t already know or can’t access quickly or cost-effectively
• put their needs and circumstances first – active listening, responsiveness, and taking the time necessary to build a strong relationship are all critical components
• deliver value for money – they don’t mind paying for great service, but the real value has to be made clear.

Addressing their individual needs

As the needs of HNW investors grow increasingly complex, they want their financial lives to be understood deeply and managed holistically. This requires an in-depth understanding about not only their assets and liabilities, but also their fears and aspirations. The greater their investment portfolio, the higher their expectations are for personalised solutions. This means more robust financial planning software will be required to handle more complex strategies and portfolios.

Communication

Through more effective communication, advisers have the opportunity to build closer relationships with their clients and adapt their strategies as needed. Regular communication also helps to remove any sense of concern they may be feeling with their investments and prevent issues before they arise.

Research suggests they prefer to receive information about their investments through online reading materials via email, videos and live webinars. They also want more access to tools that can help identify and compare investments.

Wide range of investment options

Access to a wide range of investment options is paramount for this investor segment.
Their level of wealth and unique requirements for diversification, hedging, or capital protection, need a broad menu of investment options.

In fact, many HNW investors do not believe their current products help them achieve their investing goals – 21% want greater access to specific global markets, 19% domestic sectors and 14% socially responsible investments¹.

Trust and transparency

The growing barriers to seeking advice among HNW investors are a lack of trust in advisers and fee transparency.

As HNW investors are highly sceptical, advisers need to demonstrate why they should trust their advice and at the same time, show that they understand what the client wants out of the relationship. This is the cornerstone to sustaining a productive relationship.

¹ Investment Trends – September 2020 High Net Worth Investor Report 2020