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Advisers not addressing all high-net-worth needs and concerns


The majority of high-net-worth investors rely on investment advisers to help manage risk and provide counsel on investment products they have not considered, but advisers can do a better job of keeping clients informed of their financial situation and make recommendations of suitable investment products.

These are the findings of a study released by BlackRock conducted by its iShares exchange-traded fund business in Canada.

The survey shows that 75 per cent of high-net-worth investors agree this is a time of great opportunity in the markets. Yet 56 per cent are still unsure of where to place their money and nearly 64 per cent are re-evaluating their portfolio mix, even though the vast majority of respondents use the services of an investment adviser in at least some capacity.

Seventy-six per cent of high-net-worth investors said they turned to advisers for at least some advice or decision-making, while another 11 per cent retain advisers or brokers to effect transactions.

More than 80 per cent of respondents felt it was important that advisers or financial planners give consideration to their clients’ financial wellbeing and put their interests first.

While 66 per cent of high-net-worth investors are very confident when it comes to decisions around investing for retirement, only 53 per cent are as confident picking between stocks and funds.

More than half (58 per cent) of high-net-worth investors believe it would be very important to get advice on ETFs from advisers.

The majority of high-net-worth investors who are familiar with ETFs are very positive about them relative to mutual funds in a number of areas, including transparency, rate of return, preservation of capital and lower management fees. Seventy one per cent of this group believe they offer an advantage over mutual funds at preserving capital and 70 per cent say that ETFs provide a significantly better rate of return than mutual funds.

However, only 27 per cent of respondents say their adviser, broker or financial planner has recommended they buy an ETF and 71 per cent of respondents aged 65+ were unfamiliar with ETFs.

Only 12 per cent of respondents have ETFs in their portfolios: 75 per cent of respondents said mutual funds make up a large part of their portfolio, and 71 per cent say stocks also make up a large share of their investments.

Nearly half of respondents (48 per cent) who said they own mutual funds believe that their mutual funds do not charge fees in the form of management expense ratios, while nine per cent are unsure.

"The track record speaks for itself: investors are enthusiastic about ETFs and consider them a good investment. Yet it’s unfortunate that such a small number of advisers recommend these products given the positive feedback we received from investors," says Heather Pelant (pictured), managing director, head of iShares at BlackRock Asset Management Canada.

"Investors look to their advisor to serve as the level-headed counsellor who provides information on investing trends and unique solutions. Advisers have the opportunity to engage in these discussions to maximize client satisfaction."

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