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High net-worth investors not sold on crypotcurrencies, robo-advisers

(Special) – While the wealthy may have money-management needs that are unique to them, a recent study of high net-worth (HNW) investors shows they are not quickly adopting many of the new and emerging products and technologies on the market and still want a person to help them manage, grow and protect their hard-earned wealth.

A report on world wealth by Cap Gemini has shown that the number of HNW investors in Canada with more than $1 million to invest (excluding the value of their primary residence) grew about six per cent between 2016 and 2017. The asset base of this investor group is expected to continue to grow as baby boomers, many of whom are still active in their careers, have had a life of asset accumulation and have come into sudden money through inheritances or by selling their businesses and/or properties, move into this category.

According to a CFA Institute survey of some 900 HNW investors, including those in Canada, respondents prefer to invest in traditional products and are not sold on investing in cryptocurrencies, using robo-advisers or incorporating environmental, social and governance (ESG) products into their wealth management strategies.

The report also found that wealthy investors want more, convenient access to data that they can then use themselves.

“From cryptocurrencies to Silicon Valley’s newest venture capital darling, new types of investment opportunities are everywhere, (but) high net-worth investors aren’t yet sold, with the majority of respondents leaving cryptocurrencies completely out of future asset allocation plans,” the report says.

Traditional assets still are the foundation of HNW portfolios, with 23 per cent planning to invest more in stocks in the next five years, particularly among investors in the 25 to 49 age group. And despite the growing popularity of ESG investment vehicles, only 11 per cent of respondents said they were a top priority.

HNW investors also don’t want to lose their human advisers in spite of the emergence and growth of robo-advisers.

“What they want is more access to data and information about their holdings,” Bob Dannhauser, head of private wealth management with the CFA Institute in New York City, said in an interview. “For them it’s all about getting 24/7 access to information that they can use themselves or pass on to their accountants. They want to take more ownership of information for themselves and then let a human adviser help them make the final investment decisions. This is the new wealth management model.”

HNW investors expect to receive holistic wealth management services that address the often unique complexities of wealthy individuals, specifically minimizing taxation, diversification across asset classes and industries, investing in instruments that are transparent and understandable, achieving funding for specific goals, diversification across factors and countries, SRI and “passion” investing for cars, art, wine and antiques.

The qualities that HNW investors are looking for most from their advisers include investing experience and savvy, access to and knowledge about a variety of products, good listening skills and an ability to understand the client’s needs, staying current on new strategies and anticipating future developments, and responsiveness when issues arise, among others.

“The issue about adoption of new products and technologies among HNW investors is primarily one of education,” Dannhauser said. “People still don’t understand them enough to embrace them. They don’t understand the returns, the risks or the effects on them from political decisions and policies. The industry has a lot more work to do in this area.”


Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2019 Talbot Boggs

Talbot Boggs , The Canadian Press

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