The Australian high net worth investment landscape 2017

The Investment Product and Advice Needs Survey, by leading independent research house Investment Trends, is an online survey of Australian investors. In 2017, the Survey had 6,182 respondents, of which 1,483 identify as High Net Worth (HNW) investors and collectively control over $5 billion in investable assets.

A HNW investor is defined as someone with more than $1 million of investable assets, defined as assets which they control excluding their own home, own business, and retail superannuation funds, but including Self- Managed Super Fund (SMSF) assets.

In September 2017, Cromwell again invited its investors to participate in the Investment Trends Product and Advice Needs Survey. Highlights of the survey are presented here.

The wealthy have got wealthier


The total level of investable assets controlled by HNW investors in Australia reached a five-year high at $1.72 trillion, up 12% over the last year. This increase is driven by those in the higher wealth brackets ($2.5 million plus) who are more likely to cite accumulated business profits and share investments as the largest drivers of their wealth.

Concern levels with financial markets have dropped to the equal lowest levels in nearly 10 years. Despite this, HNW investors’ outlook for the Australian equities market remains low. The average HNW investor expects capital gains of just 2.8% from equities over the next 12 months (excluding dividends).

Asset allocation

Individual direct shares are the most commonly used asset type, with most (86%) HNW investors holding these in their investment portfolios. Cash accounts and different types of property investments are the other widely held assets.

However, in general, HNW investors have had a smaller proportion of their overall portfolio allocated to individual direct shares with property establishing a clear lead as the largest asset class.

Interestingly, the 17% allocation to cash and cash equivalents represents $290 billion or the highest absolute level of cash holdings since 2009. HNW investors have indicated that they consider approximately a third of this as ‘excess cash’, or monies that would normally be invested, but are currently sitting on the sideline.

Investor goals

The overwhelming majority of HNW investors (79%) have one or more specific performance goals in mind when it comes to their portfolio. The most commonly cited goal is to beat inflation (25%), while a fifth want to achieve a specific annual return, targeting returns of 8% p.a., on average.

To generate an income in retirement is the third most widely cited goal among HNW investors, but is the top investment performance goal among SMSF members.

The recent trend among HNW investors to become more conservative with their investment objectives has slowed. Half of HNW investors say their primary investment goal for the year ahead will be either building a sustainable income stream or protecting their assets/income against market falls. This response has remained steady over the last year, following an increase between 2014 and 2016.