HNW advisers reveal, solving complexity is top motivation for client engagement

Australia’s high-net-worth segment, comprising 635,000 investors, grew 3 per cent in 2023, according to new estimates from Investment Trends, investing over $2.98 trillion. Despite an average age of 60, younger generations, constituting 14 per cent of ultra HNW investors, present a significant opportunity for financial advice practices, with 66 per cent of new entrants likely to be unadvised.

HUB24’s new white paper, “Directing the matrix: meeting the advice needs of high net worth clients”, revealed that while investment management is a core service required by HNW clients, it is likely to be simply one of many utilised in solving their problems.

Namely, insights from financial advisers featured in the report emphasised that their HNW clients were already highly successful, meaning that they weren’t looking for an adviser to enhance their success but to guide and manage their wealth for a smooth transition to the next phase of life.

This is where the importance of a lifestyle planning approach comes in, HUB24 explained, with HNW’s emotional challenges found to often supersede financial ones.

Treysta Wealth Management executive director Mark Nagle told HUB24 that a lot of their clients in the HNW segment are self-made entrepreneurs and business owners.

“Our youngest client is in his 30s. He ran a tech start-up and sold it to a big overseas company, so experienced a multi-million liquidity event,” Mr Nagle said.

“When you’re talking about HNW clients, the challenge is not generally a financial one, it’s an emotional one. They have built considerable wealth through a high-powered career or through owning a successful business. For years, they were usually the smartest, most powerful person in the room. In retirement, that all stops.

“That’s why we pivoted to a lifestyle planning approach. Even for HNW clients, it’s not about achieving investment outcomes, it’s about achieving lifestyle outcomes.”

While HUB24 found that financial goals of high-net-worth clients align with those of other investors, such as saving for retirement and making a social impact, the considerable amounts involved in their wealth management amplify both the quantity and complexity of available solutions.

“Clients have come to us with some incredibly messy situations. Helping untangle them has undoubtedly brought marriages and families closer,” said Cruz Family Office specialist Nat Daley.

The white paper also sheds light on the types of needs HNW clients have, including, among other things, tailored portfolio construction and management services; ESG investments; estate planning, insurance and asset protection advice; and business succession planning.

However, HUB24 found that HNW clients aren’t looking for an adviser to “hand them off” to other experts, nor do they expect their adviser to “know it all”. Rather, they look to their adviser to be the connector or facilitator, coordinating access to specialists with deep expertise in their own field.

As such, serving this segment of the market means the adviser needs to be the director at the centre of an ecosystem of highly specialised experts including, but not limited to, lawyers, accountants, finance brokers, philanthropy advisers, fund managers, psychologists, wellness experts, travel agents, and tax experts.

HUB24 also explored the fee expectations of those in the HNW sector. Namely, what it found is that for high-net-worth clients, fee discussions are crucial, with fees potentially reaching tens or hundreds of thousands of dollars annually.

But unlike retail trends towards flat fees, HNW clients are said to prioritise value and transparency, often expecting advisers to have a financial stake in the investment performance, aligning interests for a mutually beneficial relationship.