Velocity of Doubt
The past four years have been a boon time for investors with the average, the self deluded and even those who make decisions by interpreting the light cast by a full moon off duck entrails all making money.
But now the signs of doubt are beginning to creep into the market, particularly among high net worth investors, as they start to signal a greater focus on wealth preservation over expanding their gains of the past few years.
Hign Net Worth Investment Intentions
n 2005 = 117 n 2006 = 142 n 2007= 171
The above charts illustrates a sentiment tracking index of high net worth investors since Mid-2005, and suggests the number of people with a million dollars or more of assets to invest who are primarily interested in preserving their wealth, has grown from 8% to 35% – a four fold increase over the past 12 months.
The doubt is being driven by three core factors, according to this segment of the market.
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The fact the boom has run long and hard.
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The fact they (HNWs) are starting to understand the economy’s reliance on China better and doubt its ability to sustain the boom.
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The fact a change of government may be in the air.
Locking in these gains however is another issue, as it seems having a conversation in relation to preserving wealth with some financial planners at the moment isn’t something which happens easily.
Last week when the chart shown above was compiled, burningpants associates over at CoreData decided to call some of CoreData’s high net worth mystery shoppers to ask them their thoughts at present on seeking advice.
According to one of the individuals we spoke to, who was sitting in front of his computer with this very issue on his mind at the time: “I’m sitting here looking at my self managed superannuation trust for this financial year. For the third year in a row, I have managed a return of slightly better than 30% and the big thing on my mind is how long can this go on and what should I be doing about it but my planner says he is too busy to talk to me.”
Further phone calls to our database of HNW mystery shoppers revealed the same issue: Yes, they would like to leave some money in the market, but they were more interested in locking in their gains – but frankly didn’t know how to do it.
In addition, the early signals suggest this might trigger a renewed spurt in the investment property market – certainly in the Sydney and Melbourne markets as many of the conversations with those contacted centred on retreating to simpler yielding based products.
However, “if it wasn’t for the land tax” one of the HNW mystery shoppers said, “the solution to this would be to buy three more units in Bondi in the winter market…”
glamour-agency says:
Glamour Photography Agency
hey great stuff
Ah Moh says:
What is in High Networth INvestors’ mind (in Australia) nowaday.
anonymous says:
How could any financial planner of any credibility be too busy to talk to HNW clients. Surely this is the most coveted market segment and a ten minute phone call is all that is required.
These types of planners have little future over the longer term without a change of attitude.
ditto says:
This reflects a lot of the conversations that we are having in our dealer group at the moment – do you think though it might be too hard for the rest of the industry because (shock horror) its actually advice not a set and forget portfolio.
Remeber most businesses are just product floggers.