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HNWs seek alternative investments

The high-net-worth market has changed significantly over the last three years, with a switch to alternative investments, says Market Dynamics Research & Consulting.

The firm says the HNW sector is set to rise by 6.5 per cent this year but is unlikely to return to double-digit growth in the short term.

Its research shows that the number of people in the HNW bracket – defined as those with over £250,000 in free investable assets – has fallen by 19 per cent from 580,000 in 2000 to 470,000.

The firm says its research, based on data from 10,000 HNWs, shows their behaviour has changed over the last three years. More want to pay off long-term debt before they begin investing.

There is less demand for advice on traditional investments. Investors with a lot of money to invest are showing interest in alternative investments, particularly private equity and hedge funds.

But the research suggests there are still opportunities for IFAs as around 350,000 HNWs do not have a dedicated relationship with an investment adviser.

The consultancy says many HNWs are unhappy with the products and services available from their retail bank and advice from their current advisers. Forty-eight per cent of people with portfolios worth £1m or more, who are not already clients of private banks or wealth managers, are interesting in the services on offer from wealth managers.

Bloomsbury Financial Planning managing director Jason Butler says: “I certainly agree that there is disillusionment among high-net-worth individuals. Many want a better relationship with their adviser. This does not necessarily relate to producing higher returns. They want to know more about methodology and asset allocation.”

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