Younger HNW investors are much more comfortable investing in tangible assets than in stocks and other traditional asset classes. U.S. Trust in its annual Wealth and Worth study discovers a number of surprising and counterintuitive trends among HNW investors.
For example, shown below, for HNW investors between the ages of 18-32 – many of which inherited their wealth – tangible assets are twice as important a part of the overall wealth strategy than for older HNW investors.
Combine that with the socio-economic background of most HNW investors, displayed below, and we see diverging trends that will result in very different investment strategy and client service propositions for wealthy investors.
Only 20% of the 18-32 investors grew up poor or in a middle class environment, whereas that number is 75% or higher for HNW investors over fifty. Those older HNW investors also earned their wealth – instead of inheriting it – and, importantly, still do not consider themselves wealthy, despite their HNW status. They also invest more in stocks and bonds and believe in the benefits of long-term investing.
As a result, investment managers and relationship managers need to dramatically rethink their HNW product and service models based on much more nuanced age, wealth and gender analyses.
If they don’t, their value propositions will be as useful as bringing sand to a beach.
To be fair, with most of the new cash flows in coming years coming from wealthy individuals rather than institutions, many firms are doing just that. The leading wealth management brands in the US, Europe and globally are heavily investing in their HNW franchise, either acquiring companies or hiring broadly to beef up their value proposition and product suites.
Robert Warren and I will discuss some of the newer strategies on how to connect with different investor segments in an innovative way at the Monaco Fund Forum. Our production company RDD will screen a selection of short movies on how to rebrand investment management, in partnership with the NYU Tisch School for the Arts.
E=MC2 … The era of multi-convergence in global investment management.
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(c) Enskat Associates 2013
More details on the global M&A in the asset management industry can be found in EAQ, a regular asset management review featuring thought leaders globally.
Warren Enskat Group 