Winterthur Life believes it has identified a niche in the high net worth market which might present a business opportunity for financial planners.
Called the Upper High Net Worth sector, this particular market is thought to sit have slightly different needs to the HNW - those who have liquid assets of between £250,000 and £500,000 - and the Ultra HNW - more than £500,000 in liquid assets - because investments are either growing in value or have lost ground.
After reviewing evidence presented by four different reports (see end of story)Winterthur suggests clients now typically between the ages of 55-60 might in the past have sought advice from private bankers, wealth managers or financial planners, who only work with customers who have £500,000 or more to invest.
There are currently thought to be around 335,000 HNW individuals and 135,000 UHNW individuals currently in the UK but there could be around 40,000 Upper HNWs falling between the two groups.
That creates an opportunity for IFAs working at the higher end of the market, suggests the life insurer, as some advisers are now attempting to target this market by offering “value for money but without the “higher entry cost” usually expected at private banks or wealth management services.
Upper high net worth clients are perhaps better served by IFAs offering holistic planning suggests David Thompson, sales director At Winterthur Life, as many product providers provide support services to help such intermediaries.
"It is clear from the research that the HNW market is evolving at a fast pace, and fragmenting, creating fresh opportunities for differentiation through accurate market segmentation,“ says Thompson.
“There are therefore huge opportunities if the group is approached correctly with the right services to meet their needs," he suggests.
Distribution and remuneration models might also better suit the IFA market if working this particular group, suggests Winterthur, while encouraging clients to become more self-reliant when making decisions about investment and property planning.
Research identified a move by many HNWI towards more self-reliance, with property and equity investment being two areas where HNWI feel comfortable with following own advice.
Data gathered in Winterthur’s analysis includes:
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