As Australia’s high-net-worth market hits a new peak, growing allocations to private markets and record wealth transfer activity are reshaping investor strategy.
Australia’s high-net-worth investor (HNWI) population is larger than ever, with 760,000 HNW investors now holding more than $4 trillion in investable assets, according to leading investor research group Investment Trends.
“The strongest growth in the HNWI segment over the past calendar year was in ultra-high net worth investors cohort (UHNWIs),” highlights Eric Blewitt, CEO of research firm Investment Trends.
“The number of UHNW investors, with more than $10 million in investable assets, increased by 19 per cent to an estimated 32,000 people over the past year.
“And the value of UHNWI portfolios also increased, up an average of 14.5 per cent.”
By contrast, portfolios values rose by a lesser average of 10.8 per cent for the $2.5 million–$5 million HNWI cohort.
Blewitt notes that HNWIs’ favoured asset classes remained listed assets, accounting for some 53 per cent of portfolios, and including domestic shares, stock indexes, exchange traded funds (ETFs) and real estate investments trusts (REITs). This was followed by property investments, accounting for some 25 per cent and cash 10 per cent, followed by alternatives in terms of allocations.
Investment Trends identified allocations to private markets, comprising some 7 per cent of asset allocations as witnessing the greatest increase in allocations over the past year, with HNWIs almost doubling their allocation to around 10 per cent of their portfolios, on average.
Blewitt says HNWIs also continue to expect higher returns from private markets – with reduced risk and volatility compared to other assets. “However, this sophisticated cohort remain concerned about a lack of transparent reporting from private markets,” he says.
AI and the advice opportunity
The Investment Trends research also found that “while digital advice is seen as a potential solution to meet some of the simpler advice needs of HNWs, involvement of a human adviser is still considered to be essential for more complicated matters, such as inheritance and estate planning. Some 70 per cent of advised HNWs intend to transfer their wealth during their lifetime and there is record levels of engagement with advisers regarding wealth transfers.”
Blewitt notes some 200,000 HNWIs use financial advice, with more than 26 per cent of this segment now engaging an adviser, up from 22 per cent in the previous year.
That said, he notes, “some 58 per cent of the HNWI population in Australia report that they have unmet advice needs – which presents an opportunity for advisers that are able to tailor their offering to this client base. Of the 200,000 HNWIs using a financial adviser, 130,000 reported they have unmet advice needs.”
