HNWI wish-list haunted by scepticism
Holding on to money, rather than making more of it, has taken over minds of the wealthy. Roxane McMeeken reports. Capital preservation and risk management have replaced investment performance as the top priorities of the world’s wealthy. These come before the next tier of the wish-list – estate planning, tax planning and retirement planning, according to the findings of the World Wealth Report produced by Cap Gemini Ernst & Young and Merrill Lynch. This radical switch in emphasis among high net worth individuals (HNWIs) from making money to simply holding on to it is accompanied by an increasingly sceptical attitude towards the financial services industry. “This is leading them to place more emphasis on transparent fee structures and trusted advisers,” said Ausaf Abbas, head of Merrill’s global private client group. When it came to choosing a wealth manager, the criteria for HNWIs, in order of priority, were:
- Service quality
- Personal relationship with the financial adviser
- Valued advice
- Investment performance The report also found that while the assets of the world’s wealthy are still increasing, it is at a lower rate than ever before. However, European HNW investors are doing better than their counterparts, overseas according to Mr Abbas. “In the US and elsewhere they have held on to equities for much longer. In Europe people had a better balance in their portfolios and moved faster to respond to problems in the stock market,” he said. The number of HNWIs in Europe – defined as people with assets of at least $1m, excluding home real estate – rose 3.9 per cent to 2.6m, according to the report. Their combined wealth is estimated to have risen 4.8 per cent to E8400bn in 2002. Worldwide, HNW wealth rose by a more modest 3.6 per cent to $27,200bn (e23,000bn) last year. This was the lowest rate of growth seen for seven years.
