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Ultra-High Net Worth Express Their Views

Contributing Editor

2 February 2005

Those individuals and families with at least $25 million in net assets are becoming increasingly vocal in their demands for sophisticated financial products and services. They are becoming global in their investment outlook and are willing to dabble in alternative investments such as hedge funds to a much greater extent today then a few years ago. These findings were some of the conclusions reached by a comprehensive study on the investment attitudes of the ultra-high net worth by Citigroup Private Bank and McKinsey & Company, the management consulting firm. The report found that the UHNW have never had greater access to a whole army of private banks, wealth managers and financial advisors. But the virtual commoditisation of products, which open architecture has created, means that many of them on longer see access to products as a sufficient value proposition from their wealth advisor, according to the report. Instead, they are looking to expand the number of relationships they maintain with both traditional and non-traditional wealth advisors. Wealth advisors have to respond by adding value in areas such as providing strategic asset allocation advice, coordinating disparate investment offerings or even offer special opportunities such as co-investments. The UHNW are turning to hedge funds in increasing numbers. But many of them seek much greater disclosure from alternative asset managers as to performance, risks, fees and fund pricing. The desire for objective advice has led to an increasing demand for family office advice with a growing number of the ultra affluent setting up a family office with investment management capabilities. The survey found that a number UHNWIs want help with the challenges or raising their children amid affluence and successfully passing their assets on to future generations. Regional differences The report found a number of regional differences in terms of investment preferences among the UHNW with North American investors the most enthusiastic towards alternative investments such as hedge funds. The UHNWs in North America are also more likely to have family office relationships than other regions. The UHNWs in Europe express a major desire for tax-efficient products and tax advisory services. Latin American UHNWs attach great importance to privacy and confidentiality. In the Middle East, very rich investors value personal relationships above all else. And in Asia many UHNW investors have higher allocations in cash, real estate and privately held businesses. Citigroup and McKinsey interviewed around 120 ultra affluent individuals from around the world regarding their perspectives on investing and wealth management. Around 60 per cent of those interviewed had a net worth of $100 million.