Advising High Net Worth Australians - Report

A new study of high-net-worth Australians’ attitudes towards professional services and the scope for providing advice in non-traditional areas has been released by the Australian Centre for Philanthropy and Nonprofit Studies (CPNS) at Queensland University of Technology.

The research, comprising in-depth interviews with 20 individuals with $5m plus in net assets, asked their perceptions of their needs, how they viewed advisers assisting them with personal and financial matters and potential new services such as with philanthropy.

However their findings suggest that Australian lawyers are still out in the cold when it comes to offering philanthropic advice.

The report called “Looking for the ‘Value-Add’: Private Advice Needs of High-Net-Worth Australians” is by senior research fellows Dr Kym Madden and Dr Wendy Scaife.

They found that many HNWIs – or their spouses – were active serving on boards or otherwise active in Not for Profit organisations and most had a history of community involvement of one sort or another.

Almost all currently made donations to Not for Profit organisations but the amount they gave was highly variable.

Those who were on a path of increasing their level of giving were generally unaware of the range of tax-effective giving options available to them

Most expected to become more philanthropically engaged as they moved towards retirement, and some had already begun to be philanthropic as their work commitments reduced.

But according to researcher Dr Kym Madden the surprise is in how HNW Australians view their professional advisers and their services.

She found the ideal advisory relationship was seen as a partnership of equals. Long gone is a belief that financial or legal advisers necessarily know what is best for them: instead, trust and credibility needed to be earned

Dr Madden says advisers need to deliver, and be perceived to deliver, a clear ‘value-add’ for their HNW clients or they will be dropped. The HNWIs in this study were prepared to pay for advisory services but they wanted value for money; better outcomes than they could otherwise achieve.

She says HNWIs want advisers who are responsive to them and their particular needs. Making assumptions about a client’s needs and over-promising were seen as common mistakes made by advisers seeking their business.

The research found that family-related services including wealth preservation across generations and assistance with ageing and health care, as well as philanthropy were expected to be useful to them in the future.

Regarding their use of Lawyers, specifically, for their personal affairs, HNWIs reported using them sparingly on an as-needed basis.

Dr Madden says they were not necessarily close to them, and mixed views were expressed on how loyal they felt towards them.

Publisher and founder of Pro Bono Australia, Karen Mahlab says the opportunity to pay more attention to clients’ philanthropic needs has certainly been the driving force behind the publication of The Australian Directory of Not for Profit Organisations.

She says the Directory is now in its 19th year, and it is growing in size to now include valuable information about charitable donations and bequests and tax issues; creating a vital link between Not for Profit organisations and private and corporate donors.

The hard copy directory is distributed free of charge to over 56,000 individuals nationally – including 46,000 solicitors, more than 2000 accountants and financial planners, senior personnel in the top 1000 Companies, wills and bequest specialists, philanthropic trusts and foundations and other major decision-makers and professional bodies.

Mahlab says this latest research by CPNS reflects issues arising from the rising profile of philanthropy. It means professional advisors are more often being asked by clients about what their philanthropic options may be. Professional advisors too should no longer feel a cringe about asking about clients’ philanthropic intentions but need to ensure they are informed about the options.

Wills and Bequests Principal with Williams Winter Solicitors in Melbourne, Kathryn Liddell says it’s important to have at least a general knowledge of the philanthropic options available to clients even if we cannot provide a full range of philanthropic services.

Liddell says she sees her role as informing clients of the options available to them and steering them in the right direction to obtain the correct advice if it is not within our area of expertise.

She says he firm regularly works with clients’ accountants and other professional advisers and will refer our clients for expert taxation advice where necessary.

“Looking for the ‘Value-Add’: Private Advice Needs of High-Net-Worth Australians”
Working Paper No. CPNS 44 by Kym Madden and Wendy Scaife is available for free download at www.cpns.bus.qut.edu.au. Enquiries: katie.mcdonald@qut.edu.au.