If you had a spare $10 million to invest – what would you do?
Buy overseas shares, purchase property, buy a boat or two or take a few first class trips around the world?
According to the Director of Wealth Advisory at William Buck, Mr Adrian Frinsdorf, the answer will likely depend on your financial standing and mindset.
“The investment philosophies and strategies of the rich, the very rich and the average mum and dad investor can vary enormously,” Mr Frinsdorf said.
A high net worth investor is a common term in financial advisory circles to describe people with investments outside the family home valued at or above $1 million. A growing number of Australians with investments valued above $10 million have seen a new category rise to prominence, the so-called ‘ultra-high net worth investor’.
“I’m seeing more clients with multi-million dollar portfolios,” Mr Frinsdorf said.
“With the sale of successful businesses and rise of investments over the last decade wealthy investors have moved from rich to very rich. Often these people come from successful business backgrounds or established families. Traditionally they are usually in their 50s but I’m also seeing more people in their 30s seeking advice having built exceptional wealth through smart business decisions.”
The number of high net worth investors continues to grow globally with 278,000 Australians now in this category, according to the Capgemini 2018 World Wealth Report.
William Buck has, for a long time, assisted wealthy individuals with their financial affairs and recently established a boutique Private Office service for the specific needs of the ultra-high net worth investor.
Mr Frinsdorf, who heads William Buck’s Private Office team, said an investor’s mindset was often linked to the wealth position of the individual or family.
“For average mum and dad investors the financial objectives are usually around generating enough income for a comfortable retirement and still leaving some money for their children,” he said.
“For high net worth investors, it’s less about their own retirement which is already taken care of, but more about maximising the estate for their children.
“For the ultra-high net worth investors, it’s a longer term outlook. It’s more often about protecting the wealth for future generations that may not even be born yet and educating their own children and grandchildren to make smart financial decisions.”
How do the rich invest?
“There are many myths surrounding where and how the most wealthy individuals and families choose to allocate their money. In reality it’s usually not as speculative and high risk as most people think,” Mr Frinsdorf said.
“These people are typically very careful with their investment capital and, having lived with wealth, are respectful of money and its value.
“In my experience, ultra-high net worth investors are often not interested in taking large speculative risks but instead looking to grow capital for future generations.
“Ultimately they want to have as much control over their investments as possible.
“Assets such as direct commercial property and full ownership or part stakes in familiar businesses are generally favoured by ultra-high net worth investors while cash is also a popular asset class. Australian and overseas shares usually form part of their portfolios, but a much lower percentage than the average mum and dad.”
Adrian Frinsdorf leads William Buck’s Private Office team – providing bespoke, sophisticated and integrated financial and investment solutions for successful business owners, families and individuals. Adrian can be contacted on Adrian.Frinsdorf@williambuck.com or by calling 08-8409 4333.