Affluent Australians are “very reluctant” to purchase investment products such as managed funds from non-established players, new research has found.
More than 80 per cent of investors with $50,000 to $250,000 in liquid assets would only buy products from a well known company, according to a report by Datamonitor on the local wealth market.
“Therefore the big players in the market should be able to pick up new clients as any foreign players looking to expand into Australia will have to invest a great deal of time and money in building up their brand profile,” Datamonitor senior analyst Andrew Haslip said.
However, Haslip pointed out that such an investment by non-established groups could be well worth the effort because of the big pool of potential customers in Australia.
“Generally, wealthy individuals in Australia plan their own investment strategies and this is particularly true for those with $50,000 to $250,000 in liquid assets, where approximately three out of five still manage their own investments,” Haslip said.
“This represents a large potential pool of clients for new entrants to the wealth management market or even those existing providers looking to increase their volume.
“Unlike other developed markets, where more investors would already have a tight relationship with a broker or independent financial adviser and so need to be won from a competitor, players in the Australian market simply need to win over new clients by making the case for consulting investment experts.”
Additionally, the Datamonitor report also suggests that cash remains a popular option among Australians with $100,000 to $249,999 in liquid assets to invest.
Almost half of the respondents in that band added to or took out new cash products in the last year.
“This has hurt the fee income of many wealth managers as such basic products do not attract high management fees,” he said.
“Australian investors rely first and foremost on their own judgment, meaning many have not formed relationships with wealth managers.”
Datamonitor surveyed 300 Australian consumers that had over $50,000 in investable assets.
