CompaniesMay 21 2013

HNWIs are actively managing their finances: CEB

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ByDonia O’Loughlin

More high net-worth individuals are taking an increasingly active role in managing their finances, creating a major growth opportunity for “stable” fund managers and financial advisers, research from member-based advisory firm CEB has revealed.

The Consumer Financial Monitor report by CEB surveyed over 17,500 consumers across 24 countries, looking at consumer confidence in financial providers and feelings about personal finances.

It found that as Europe continues to reel economically, with depositors in Cyprus, being the first in Europe to lose uninsured funds, the percentage of European high net worth individuals who have used a financial advisor, worked on a long-term financial plan, or kept a more formal budget, rose five percentage points from last year to 34 per cent this year.

This comes at a time when the European high net worth individuals are reporting a significant improvement in their balance sheets. This quarter, the number of high net worth individuals who expanded their savings or investments, or increased debt repayment, hit a two year high of 40 per cent.

Despite an overall drop in confidence, CEB’s research shows high net worth individuals have maintained their faith in financial products. This may present an opportunity for firms that can demonstrate financial stability and a track record of high-quality advice, as high net worth individuals look for more active strategies.

The survey also noted stronger interest in long-term investments among wealthier European consumers, as well as a significant rise in insurance purchases.

Peter Aykens, managing director at CEB, said: “The euro crisis has triggered heightened proactive financial management among high net worth investors, and this is set to continue through 2013.

“In light of the Cyprus bailout, we anticipate a ‘flight to quality’ as high net worth individuals scrutinise their providers more closely, gravitating to those who can demonstrate real strength and stability.

“This has major implications for financial providers of all kinds. High net worth individuals are clearly seeking to preserve wealth first and foremost and will abandon any provider unable to build sufficient trust and confidence in their capabilities.”