HNW individuals have lost trust in financial services, take a more hands-on stance in philanthropy and finances, and prefer simple to complex investments, according to a SocGen/EIU survey.

High net worth individuals have lost trust in wealth management, take a more hands-on stance in philanthropy and their finances and prefer simple, relatively liquid investments instead of complex products of recent years, according to a new survey.

The results – some of them corroborated by other surveys and anecdotal evidence, were contained in a report by Société Générale and The Economist Intelligence Unit. The research drew on interviews with 11 of the world’s richest people and 13 wealth management experts.

Meanwhile, SocGen, in a presentation to journalists yesterday, gave an upbeat assessment about equities, citing positive earnings momentum, but noted that emerging markets are relatively highly valued compared with some other markets, and argued that commodities are back on an upward price track after sharp falls in 2008.

But although the economic outlook is brightening in some respects, the French bank’s survey, conducted late last year and early in 2010, showed that the financial turmoil had left deep scars with HNW individuals.  

“The global financial crisis has caused a trust crisis among the world’s wealthiest individuals, driving them to be more vigilant, to ask more questions and, in some cases, to take a more direct, hands-on role in their philanthropic and financial affairs,” SocGen said in its report.

The survey did not find whether investors favoured one model of wealth management business over another, such as preferring stand-alone banks to those held in integrated financial teams. However, the survey revealed a clear dislike by clients of having products “pitched” at them, Jason Sumner, a senior editor at the EIU who was involved in producing the report, told journalists.

“Pitches really turned them [investors] off. It is very much an attitude of 'I want to have a relationship with managers without them trying to sell me stuff',” Sumner said.

The experts involved in the report were William Drake and Adam Wethered, co-founders of Lord North Street; Sebastian Dovey, founder of Scorpio Partnership; Bertrand Lavayssiére, managing director, global financial services at CapGemini; Claudia D’Arpizio, partner, Bain & Co, and Andrew Rodger, executive director, Stonehage. (Drake and Dovey are members of WealthBriefing’s editorial board).

Other experts involved were David Alexander, chief executive of AAG, the wealth management boutique; Nareg Bagdasar, Agence 107, the luxury property development firm; Darwin Chen, art philanthropist; Hugh Devlin, consultant at Withers, the international law firm; Tarek Khlat, chief executive, Crossbridge Capital; Rachel MacLynn, psychologist and Isaac Mostovicz, consultant.

Among the wealthy individuals surveyed were James Caan, the UK entrepreneur and panelist on the BBC Dragon's Den venture capital TV show; Aditya Jha, the Canadian businessman, and Suresh Neotia, chairman emeritus of Ambuja Cements and member of the Reserve Bank of India's central board of directors.