THE CASE FOR A FIDUCIARY RESPONSIBILTY OF FINANCIAL ADVISORS TO THEIR CLIENTS

HIGH-NET-WORTH INVESTORS DEMANDING MORE FROM PLANNERS


If financial planners want to make more inroads with high-net-worth (HNW) clients, they need to provide a broader and more integrated set of capabilities.


That is the bottom line of the Merrill Lynch Global Wealth Management and Capgemini World Wealth Report, released today, which argues that an enterprise value approach is especially critical in today’s environment because HNW clients expect their relationships with firms and advisers to create more sustained and broad value than before the global financial crisis (GFC).


Commenting on the findings of the report, Merrill Lynch Global Wealth management head John Thiel said that while an air of normality was returning to global financial markets, HNW investors had been deeply impacted by the effects of the GFC.


“Many high-net-worth clients have clearly rethought their investment and life goals and are now heavily weighing the amount of risk they are willing to assume in order to reach those goals,” he said.


Thiel said firms would need to bring the full force of their capabilities to bear to deliver an integrated response to the complex post-GFC needs of HNW investors.


The Merrill Lynch Capgemini research suggested that capital preservation had become more important to HNW investors, along with effective portfolio management.


Capgemini Global Financial Services head of sales and marketing, Jean Lassignardie, said that although HNW investors took on more calculated risk in search of better returns, at the end of 2010, they still held a significant amount of their assets in more conservative instruments such as fixed-income and cash and equivalents.


“Amid this mixture of trust and misgivings, firms and advisors must continually demonstrate their value and relevance to help HNWs meet their changing and complex needs,” Lassignardie said.


Mike Taylor
Money Management
June 23, 2011