When it comes to choosing a wealth manager, investors are extra careful in their selection. Simply put, they want an advisor with the right expertise and savviness to turn financial complexity into clarity, according to a report by CFA Institute.

The report, which surveyed 900 investors with investable assets of more than $1 million, focused on the latest trends of the financial lives and advisor relationships of high-net-worth investors.

“Given the incredible depth and breadth of knowledge required to build expertise in wealth management, it’s no surprise that survey respondents list investment expertise as the most important trait they seek in a wealth manager,’’ the report said, pointing out that high-net-worth investors face unique wealth management challenges such as nuanced tax planning and strategy to safeguarding the interests of future generations.

At the same time, Bob Dannhauser, head of private wealth management, who spearheaded the research and has spent the past year learning the financial habits of this wealthy cohort, was surprised to learn that investors placed such high value on investment management relative to other dimensions of wealth management. "Advisors who practice down market may have struggled to add value to the passive investment strategies that often suffice for clients with simpler needs, but the folks we spoke to are looking beyond that to value an advisor's investment expertise that can help them with more complicated situations and markets."

Dannhauser said the report was encouraging for the growth of financial planners. ”It’s a fascinating look for where investors are looking to get help over the next several years,’’ he said.

The report found that high-net worth investors expect holistic wealth management service, a trait that is even more prominent for younger high-net-worth investors, who are over twice as likely as their older counterparts to seek a holistic approach to wealth management. The report explained that “holistic” doesn’t mean “generalist.’’ It pointed out that the unique complexities of wealthy individuals often require bringing in the right specialists at the right time, and a sophisticated wealth manager ought to reflect these specialist views as they create and execute a robust investment strategy. 

It added that no matter how complex the portfolio or nuanced the investment strategy, these investors demand that their wealth managers measure up to the ambitions they have for their wealth.

Cryptocurrencies, robo-advisors or incorporating environmental, social and governance factors into investment analysis are not on the minds of these investors, the report found. Traditional assets remain the bedrock for them.  Those over 50 were more against putting money into unconventional vehicles in the next five years, the report found.

The top investment priorities according to almost one-half of the respondents are minimizing taxation (50 percent), followed by diversification across asset classes (47 percent), and diversification across industries (41 percent), the report said.

Fully one-half of wealthy investors 40-to-49 years old said their primary goals as they look to maintain and/or build wealth, is early retirement, as compared to the survey average of 38 percent. Twenty-eight percent of investors age 25 to 39 said their primary goal is new business opportunities and acquiring companies, compared to the survey average of 7 percent. 

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