HNWIs slow to act on alternative assets

16 December 2002

Tweet
Facebook
LinkedIn
Google plus
Send to

Britain's Ultra-HNW and family office investors are challenging the convention of asset allocation into alternative asset classes, according to research undertaken by wealth management strategy think tank Scorpio Partnership. As a group, this asset class still has a much lower than expected allocation to alternative investments than the perceived market wisdom, despite a strong awareness of their value. The lower allocation levels indicated by these top wealth tiers is judged to be due to the fact that it takes time for 'recommended' allocations from private client wealth managers to feed through to investors' portfolios. The research indicated that the top wealth tiers were increasingly being approached by financial services institutions with regard to alternative investments. However, Ultra-HNWs and family offices complained that virtually all banks are promoting hedge funds - typically funds-of-funds - rather than private equity solutions which are typically their preferred investment. Given this increased demand, Scorpio Partnership recommends that institutions review their capabilities in private equity solutions alongside hedge funds. Separately, the research indicated that this client sector is still relatively under-serviced by private banks. Indeed, the Ultra-HNW and family office sectors rely heavily on independent advisors, turning to them first for advice on their alternative investment allocations, and putting the role of the private bank and private banker very much in second place.