Turbulent market conditions are driving the uptake of financial advice among wealthy investors who seek better returns.
GlobalData Financial Services’ 2016 Global Wealth Managers Survey shows that more than four fifths of wealth managers globally agree that wealthy investors are becoming more inclined to seek professional investment advice because of market volatility. The change in investors’ attitudes is most apparent in developing countries such as the UAE, India, China, and Russia, where uptake of advice has traditionally been low.
Figure 1: High net worth investors are becoming more inclined to seek financial advice because of market volatility
Proportion of wealth managers that agree (%)
Source: Verdict Financial’s Global Wealth Managers Survey 2016
With interest rates currently at a low level, it has become increasingly difficult to achieve high returns. Hedge funds, private equity and derivatives have become more interesting for investors aiming to earn higher yields. As a result, investors have increasingly complex portfolios and growing allocations into alternatives that require specialist advice.
Financial advisers that can offer a wide range of investment products in response to changing investor preferences, including more sophisticated and exclusive alternative investments, should expect to capitalise on the uncertainty in the current market conditions.
A number of global private banks already offer the wealthy a variety of products and services to capture a greater market share and clients. Citi in Singapore, for instance, has distinct propositions for each client segment that they serve. Citigold clients are offered mutual fund products, while wealthier Citigold Private Client customers can access private equities, hedge funds and derivatives.
Standard Chartered recently launched a private investment program for wealthy investors, enabling them to look at private equity as an alternative asset class to diversify their portfolios for higher returns. The new Pegasus Series product offers investors the opportunity to gain exposure to industries and other asset classes that may be difficult to access by investors on an individual basis.
Société Générale has also been focused on increasing introductions to primary market issues, IPOs, rights issues and bond issues, M&As, private equity and financing to wealthy clients by seeking cross-selling opportunities between its private and investment bank divisions.
As more advisers seek to meet the growing demand for professional advice, investors stand to benefit from wealth managers that offer a wide range of investment products.