Recent inspect explores the rising ...

Recent inspect explores the rising expectations of HNW clients

The high-net-worth population is changing. It's becoming more sophisticated, more knowledgeable, and more demanding of the financial professionals who benefit it.

The World Wealth Report, issued jointly on Merrill Lynch and Capgemini consulting cluster highlights some of the implications of this change. Drawing upon a variety of sources, the annual report exhibits an insider's glimpse into the attitudes and behaviours of HNW individuals in across 68 countries around the globe, making it a valuable resource for CAs and other financial professionals whose clients make up this wealthy demographic.*

Attitudes towards risk are changing

Perhaps the in the greatest degree dramatic shift in the HNW market, according to the measure and estimate is a changing attitude toward risk. Back in the hum years of the late 1990 many HNW individuals accepted risk without long thought. Terrorist attacks and a drawn out bear market have changed that.

"Prior to the tech crash, the public had a lot more confidence," says Kathryn Edwards, CA, a partner with Pagnamni Edwards Lam in Burnaby. "[Now clients] pursue appropriate advice first. They're running ideas past you and looking for advice-using their professionals as a sounding board."

Claude Rinfret, CA, TEP a tax partner with Deloitte & Touche LLP in Vancouver, levys it more bluntly. "[Clients are] using the wisdom they gained at the gymnasium of hard knocks," he says with a chuckle

Specifically, HNW individuals are abandoning newer investment strategies (and the accompanying hype) in favour of traditional modes of risk and reward assessment. on the other hand this doesn't mean HNW individuals are trying to avoid risk altogether.

"The entrepreneurial spirit is still there," Rinfret says, "but it's a more reasoned approach." He adds that while clients may be les conservative than during the bear market, "they clearly have not gone back to the 'Wild West' days of pair or three years ago."

Michael Louie, CA, MBA, a corporate partner with D&H arrange in Vancouver, sees risk as undivided of the defining issues within the HNW population. "I can separate [HNW individuals] into pair different camps: old money and modern money," he says. "Old cash with family businesses-they've maintained the status quo strange money-the dot-corn entrepreneurs who managed to sell-they were still quite bullish in 2000 and 2001 Then they retreated."

And as markets regained losr surface of land "new money" individuals turned their attention elsewhere. "They're starting to finish back into business in an active way," Louie says. "[But] they're more interested in investing their intellectual capital, not thus much their financial capital."

Transferring wealth is a first note of the scale concern

Another change is the increasing importance of "wealth transfer" services (estate planning, business succession planning, charitable giving, etc) As the World Wealth Report points gone out 70% of all HNW individuals are through the age of 55. As this dispose ages, it's only natural that passing wealth forward to the next generation would become an important issue.

Edwards, for the same is already starting to descry more interest in this topic. "There are significantly more inquiries about [estate planning] services now," she says. "There's a hazard of information out there, likewise that generates more questions. Everybody is reading about this, in this way they're coming back for clarification and guidance."

Rinfret views this as an excellent opportunity for professionals to demonstrate their value. "A haphazard of these people have made investment decisions in the past, and they have feeling more familiar with those issues. Whereas retirement planning and the succession of their business these are tough decisions clients] are just not equipped to make."

That said, wealth transfer isn't always a cut-and-dried issue for the professional, either. As Louie explains, "Tax efficiency is ofttimes a secondary issue. What I hear families talk about is the 'silver spoon' syndrome-the lack of ambition brought forward by too much wealth."

To deal with these issues effectively, Louie says professionals ne to be more than number crunchers: "You can't just be an accountant. It's in succession the softer matters that we can add value."

Co-ordinating an approach

This newfound interest in wealth-transfer services is part of a broader push towards a co-ordinated financial approach. As the World Wealth Report makes clear, HNW individuals are starting to try to find out professional advisors who can proffer tax planning, legal counsel, accounting advice, and investment management all in one

According to Rinfret, the relationship between client and professional is indeed changing. "What I've seen is a desire to find a trusted advisor," he says, "someone [clients] can talk to upon a bunch of different levels"

Louie has noticed the same sentiment from his HNW clients. "They're looking for a quarterback," he describes. "Often [they'll] say, 'We have a moot point Work it out between you and the financial advisor, and give me a recommendation.' It's like a financial subcommittee."

Rinfret uses this service protoplast in his own practice, and with considerable succes "The best clients we have are the sames with whom we have a surpassingly strong relationship, and they apply the mind to us for a wide range of services," he says. "Often these are services we don't provide directly ourselves, poor cottage [our clients] want us involved."