For many advisors, this may be the right time to strengthen your relationship with clients more deeply. In a recent survey conducted by US Trust, ‘Insights on wealth and worth’ shows that wealthy investors who work with financial advisors are more likely to have important plans in place to help them fulfil a life well lived.
The survey covered 684 investors in US. Though the survey was conducted in US, advisors in India can find valuable insights from this survey to serve their HNW clients better.
“Although most respondents have a financial advisor (66%), they tend to use these professionals in narrow, tactical ways, rather than to help them meet broader, strategic goals. Still, those who have a financial advisor are somewhat more likely to feel financially secure and less likely to struggle with balancing conflicting priorities across different areas of their lives. They tend to have greater agreement with their spouse about the use of wealth and a healthier overall relationship with money,” states the report.
So what should an advisor do? Talk to your clients about their goals and work together to identify and address gaps in the financial planning so that you can put a strategy in place.
Another interesting finding is that high net worth individuals are looking for balanced and risk managed growth. The respondents say that growth is important but only while managing risk. More than half of the respondents (55%) reported this as their main objective. “Investors 50 or younger are particularly likely to see growth as a priority, while households that derive more than their income from investments were likely to favour asset preservation,” finds the study.
As they continued to reach for growth, HNW investors placed significant emphasis on risk protection. Only about a third (36%) said they would be willing to take on higher risk to achieve higher returns.
The report also shows that nearly six in ten of the wealthy have more than 10% of their portfolios in cash. On first impression, significant cash holdings might be interpreted as a sign of concern about the markets. However, the top reason respondents offered for holding cash in their portfolio was to enable fast action on an investment opportunity, such as buying in a down market or taking advantage of a rising trend.
High-net-worth investors typically consider liquidity important to their financial well-being, whether needed to meet unexpected expenses or to make an opportunistic investment. So, to avoid opportunity costs and tax consequences of liquidating assets, you can help structure a plan for liquidity needs.
