Passing the wealth baton

Make way for young aspiring advisers... this country needs you and your digital connectedness.

- By MARCUS PADLEY

There are a small number of very wealthy people in Australia – 2.58% of Australians (690,000) have more than $1 million in investable assets. The average investable assets of those with more than $1 million of investable assets in Australia is $4.92 million, meaning Australian wealth is a ‘rock in a sock’. Investable assets include everything except the primary residence, personal assets such as cars, jewellery and art, and lifestyle assets like holiday homes that don’t produce an income.

While some of you may consider people with more than $1 million of investable assets as HNW (high net worth), the truth is that assets of $1 million are of little interest to the financial planning industry. These days, most financial planners probably won’t stir themselves into interest until you have $5 million – $10 million is better. And if you hear a financial planner describing themselves as a UNHW adviser (ultra high net worth), it means they are targeting someone with $30-$50 million.

The scale goes something like this:
• High net worth (HNW): $1 million to $5 million
• Very high net worth: $5 million to $30 million
• Ultra high net worth (UHNW): $30 million to $50 million plus.
• Strategic family office level: Starts at $100 million plus. It is generally thought that below that level, it’s not worth setting up a company and employing people to manage your money.

In total, in Australia, investable assets in the hands of private individuals are thought to top $3.5 trillion (liquid portfolio capital excluding super and home equity). Of that, about 40 to 45% is thought to be managed within a financial advice relationship. And therein lies a problem. Relationships.