HNW Canadians remain uncertain

The depths of the market decline are well behind us, and yet there is a certain unease among Canadian high-net worth investors, according to a recent study by BlackRock Inc. The survey found 56% are still unsure of where to place their money.

“High-net-worth investors are seen as trendsetters yet we found they have as many questions and concerns about their financial situation and investment trends as anyone else,” said Heather Pelant, Managing Director, head of iShares, the ETF division at BlackRock Asset Management Canada Limited.

The survey found a strong home bias, with 67% saying they were very confident in Canadian investments, while 50% were bullish on emerging markets. The U.S. market, however, was another story; just 39% viewed the American markets in a positive light.

The recession has changed the way these investors approach the market, with 73% saying they had become more cautious, while 64% said they were re-evaluating their portfolio mix.

“Given their desire for caution, it’s more important than ever that these investors are aware of the latest financial products and solutions that can help them achieve investment goals,” Pelant said. “Advisors have an opportunity to elevate the conversation and provide value-added service by carefully explaining different and/or other sound investment vehicles, such as ETFs.”

Among those HNW investors who have an advisor, just 27% said their advisor had recommended and ETF. Among all survey participants, just 12% hold an ETF in their portfolio.

Perhaps not surprisingly, the survey found age had an impact on investor confidence, with 78% of those between 35 and 50 years of age saying they were very confident in making financial decisions, compared to 62% of those aged 51 and over.

“We’re seeing a direct correlation between younger investors and the likelihood of making independent investment decisions and adopting new ways of investing, whereas the older demographic tend to rely on the advice of others and keep to what they know,” said Pelant.

Younger investors also were less impressed with financial advisors, with 60% under the age of 35 saying they could find information on the internet that was at least as good. The majority in this age group also said it was not worth paying advisors’ or brokers’ fees.

A quarter of them said they exclusively invested online using a self-directed brokerage account.

For the purposes of the study, high-net-worth investors were defined as those with at least $500,000 in investments, excluding their homes and any workplace or employer-sponsored pensions.

(05/04/10)