Specialized Advice a Top Priority for Wealthy Investors

 June 22, 2010 – In spite of stock market rebounds and emerging signs of recovery in various economic indicators, wealthy investors have not rushed to chase performance or seize risky market opportunities.

According to the 14th annual World Wealth Report by Merrill Lynch Global Wealth Management and Capgemini, high net worth individuals (HNWIs) have remained cautious and point to effective risk management (90%), transparency and simplicity (93%), and specialized advice (93%) from firms and advisers as top priorities. A press release said HNWIs are working more actively with their advisers to properly understand the nature and potential performance of specific investments, manage their downside risk, and receive advice that is aligned with realistic and appropriate goal-setting, based on their actual risk profile. 

The study found that although HNWI clients have regained trust in their advisers and firms, their trust in regulatory bodies and financial markets has yet to fully recover. While 59% of HNWIs indicated they had regained trust in their adviser over the past year and 56% had regained trust in their wealth management firm, 71% indicated they have yet to regain trust in the regulatory bodies that are supposed to monitor the markets and protect investors. Merrill Lynch Global Wealth Management says wealth management firms and advisers will be further challenged to overcome investor hesitation and caution as they encourage the kind of investing that is needed to recoup losses.   

In addition, according to the press release, clients are demanding fundamental changes in how they are served, and are rewarding firms that can clearly demonstrate a sharper understanding of their emotional and intellectual needs and objectives. To effectively meet the needs of HNWI investors today, wealth management firms and advisers are looking to incorporate emotional factors into stronger portfolio management and risk capabilities.   

Adapting to these new market realities and changing client behaviors will require different degrees of transformation and change that can potentially affect all aspects of the operating model, including products, processes and platforms, and service models. The specific adaptations each firm ultimately makes will depend on the firm, its size, focus, specialization, and its vision for its future, as well as its desire and ability to adapt and lead.   

It will be essential to deliver the right level of high-touch advice and market-relevant product and service innovations to meet the needs of all clients in a scalable way, the press release concludes.