Institutionally-owned advisory practices are finding it harder to retain high net worth (HNW) clients and are increasingly losing them to independent boutique firms, according to Wealthsure Financial Services.
The approved product lists of some of the institutionally-owned dealer groups were fairly limited for more sophisticated clients such as HNW investors, Wealthsure chief executive Darren Pawski said.
“HNW clients want independence, they have got a lot of money and they don’t want it just in that one product or that one range, so particularly in the HNW area the public is becoming aware of the benefits of independence,” Pawski said.
“Dealing with institutions that create their own product there’s always going to be a high possibility that their products will be used in the advice process … and there are even certain instruments they don’t use at all, whether it be derivatives-based or it could be fixed income-type products.”
HNW individuals preferred to have a broader range of products and strategies to satisfy their advice needs, he said.
“HNWs want products that are based on independent merits where there’s no ownership, there’s no conflict at all and I think particularly the very HNW clients are really looking for that sort of advice.”
However, Advice Centre Consulting managing director David Fox said product biases could still exist in the advice recommendations provided to the clients of independent advisory firms.
“Maybe in some of these independent practices there could be less bias, but others would have just as much a bias in their product or platform recommendations as the institutionally-owned dealer groups,” he said.
