The global financial crisis has caused a
“trust crisis” between ultra high net worth (UHNW) individuals and
their investment advisers, driving clients to take a more hands-on
role and seeking greater transparency over their financial and
philanthropic affairs, according to a new report commissioned by
Société Générale Private Banking.
The research, The new world of
wealth, carried out by the Economist Intelligence
Unit, confirmed that UHNW individuals had moved from
choosing complex investment products, such as hedge funds and
derivatives, to products which were simpler, more transparent and
offered more liquidity.
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Most of the very wealthy (UHNW) are feeling completely at
sea right now,” said an anonymous US fund manager and significant
investor quoted in the report.
Société Générale Private Banking global chief
executive Daniel Truchi estimated that during the crisis
clients had held up to 40 percent of their assets in cash and other
liquid assets, although this had fallen to around a third.
The trust crisis has also prompted managers
and advisers to change their approach to clients in three areas:
reporting, research and structure of the relationship.
A key change was simplification in reporting.
Clients were asking for fewer pages, a more personalised service
and increasingly looking for more online access to resources from
accounts to research reports, the report said.
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By GlobalDataClients were also moving to a relationship
model characterised by having one trusted central adviser who then
referred clients on to specialists. This model was compared to how
general practitioners refer patients onto medical specialists.
According to the 2009 World Wealth
Report, which was quoted in the research, the global
population of UHNW individuals fell by 25% during 2008 to an
estimated 78,000. Overall, the wealth held by this group shrank by
24% from the previous year.
UHNW individuals were defined as those with
investable assets of more than $30m.
The survey was based on interviews between
November 2009 and January 2010 with 11 UHNW individuals and 13
experts who serve the UHNW market.
