Wealthy lose trillions to hungry bear, report says

“Among the better performing firms is a very clear sense they have of what their basis of advantage is. They have a clear view of who their target client is, they have a business model and a cost structure that’s aligned to serve that client.” R elated Stories Canada one of the top producers of […]

By Steven Lamb | July 22, 2003 | Last updated on July 22, 2003
3 min read
  • Canada one of the top producers of millionaires, report says
  • Improve relationships or risk losing wealthy clients, advisors warned
  • Sweet opportunity: Attracting and advising millionaire clients
  • True wealth: Service first
  • A wealth of information: Stenner’s new book unveils the mind of the HNW

    High-net-worth clients have had their confidence in both the markets and their financial advisors shaken and they’re looking to stem the losses, the report found.

    “Here in Canada, the reality is not only are there fewer wealthy investors, but those who have maintained their wealth are much more cautious and have greater distrust of the markets and of the investment industry,” says Orlander.

    The report discovered that in North America, the asset allocation model has gone from 49% equities in 2001 to 41% in 2002. Fixed-income allocations rose from 21% to 24%, and cash holdings were up from 30% to 35%. It is unclear how much of this was due to an intentional shift, rather than simply reflecting the loss of value in equities, but it appears that the affluent were in no rush to put more money into stocks.

    The report says that the goal for many HNWs is wealth preservation, with strategies focusing on absolute rather than relative returns. This shift has seen the “big money” moving out of the equity markets and into safer investments. The report points out, though, that these strategies are often less profitable for asset managers.

    The bond market has been bid up to the point where returns are scarcely realized and many alternative investments are under-performing in the “less volatile, lower-interest-rate environment.”

    “The recent rise in equity markets is positive for investors and wealth managers, but the damage done over the past three years to wealth managers and their clients, as well as to trust and confidence, will take time to repair,” said Bruce M. Holley, BCG vice-president and director in New York, and one of the four authors of the report. “Careful management and good strategy is essential to winning in challenging times.”

    Have you noticed a change in your HNW clients’ approach to investing? What strategies have you tried to rebuild your clients’ confidence in you and in the markets? Share your thoughts or ideas with your peers in the Talvest Town Hall on Advisor.ca.

    Filed by Steven Lamb, Advisor.ca slamb@rmpublishing.com

    (07/22/03)

    Steven Lamb

    • “Among the better performing firms is a very clear sense they have of what their basis of advantage is. They have a clear view of who their target client is, they have a business model and a cost structure that’s aligned to serve that client.”

    R elated Stories
  • Canada one of the top producers of millionaires, report says
  • Improve relationships or risk losing wealthy clients, advisors warned
  • Sweet opportunity: Attracting and advising millionaire clients
  • True wealth: Service first
  • A wealth of information: Stenner’s new book unveils the mind of the HNW

    • High-net-worth clients have had their confidence in both the markets and their financial advisors shaken and they’re looking to stem the losses, the report found.

    “Here in Canada, the reality is not only are there fewer wealthy investors, but those who have maintained their wealth are much more cautious and have greater distrust of the markets and of the investment industry,” says Orlander.

    The report discovered that in North America, the asset allocation model has gone from 49% equities in 2001 to 41% in 2002. Fixed-income allocations rose from 21% to 24%, and cash holdings were up from 30% to 35%. It is unclear how much of this was due to an intentional shift, rather than simply reflecting the loss of value in equities, but it appears that the affluent were in no rush to put more money into stocks.

    The report says that the goal for many HNWs is wealth preservation, with strategies focusing on absolute rather than relative returns. This shift has seen the “big money” moving out of the equity markets and into safer investments. The report points out, though, that these strategies are often less profitable for asset managers.

    The bond market has been bid up to the point where returns are scarcely realized and many alternative investments are under-performing in the “less volatile, lower-interest-rate environment.”

    “The recent rise in equity markets is positive for investors and wealth managers, but the damage done over the past three years to wealth managers and their clients, as well as to trust and confidence, will take time to repair,” said Bruce M. Holley, BCG vice-president and director in New York, and one of the four authors of the report. “Careful management and good strategy is essential to winning in challenging times.”

    Have you noticed a change in your HNW clients’ approach to investing? What strategies have you tried to rebuild your clients’ confidence in you and in the markets? Share your thoughts or ideas with your peers in the Talvest Town Hall on Advisor.ca.

    Filed by Steven Lamb, Advisor.ca slamb@rmpublishing.com

    (07/22/03)