FinAsia: UHNWs still don’t trust advisers

A SocGen survey reveals that UHNWs’ trust in their wealth managers has still not returned.

Vincent Magnenat, deputy to the CEO of marketing in Singapore and South Asia at Societe Generale Private Banking, talks to FinanceAsia about the results of a qualitative survey entitled “Seven key trends for investing, giving and spending among the very rich”, which was sponsored by his firm.

Why are the very rich no longer feeling secure about their wealth?
The key reason is because of the 18 months of nail-biting volatility in financial markets and the wealth destruction on a massive scale.

In fact, this year we conducted a timely survey on the topic of ultra-high-net-worth individuals (ultra-HNWI) and their behaviour in terms of investment, philanthropy and consumption post the downturn. The qualitative survey, sponsored by Societe Generale Private Banking, was conducted by The Economist Intelligence Unit on the basis of interviews with ultra-HNWI and experts around the world.

Although the turmoil in financial markets affected almost everyone, those at the upper end of the wealth scale by definition lost more. The very wealthy were also more likely to be exposed to some of the most badly affected asset classes, such as commercial property, and to have investments locked up in illiquid products.

How has the element of trust changed between ultra-high-net-worth individuals and investment experts?
According to the survey, the financial crisis has led to a “crisis of trust” between ultra-HNWI and investment experts. This is likely to have resulted from the fact that the very wealthy were more likely to have been exposed to asset classes that performed terribly in the downturn, such as commercial property, and complex, illiquid investments.

In the medium term, the findings predict that ultra-HNWI will be more vigilant, with increased due diligence and hands-on involvement and will thrust more emphasis on trust and transparency rather than high returns. They will be asking more questions and in some cases taking more of an active role in managing the investments themselves.

However, at Societe Generale Private Banking in Asia, we also noticed that many ultra-HNW clients were working even more closely with our bankers during and after crisis. They were more dependent on us for frequent market and investment view updates.