Think mega wealthy, seriously cashed up, an embarrassment of riches and the elite and exclusive world of private banking, add to that investment strategies for tens, hundreds, thousands of millions of dollars.

Are you visualising brilliantly conceived systems of complex, sophisticated asset allocation schemes?

From the outside looking in there is a distinct notion of “us and them” and the presumption that a cavernous divide exists between where the high net worth stash their cash and the options available to the rest of us.

An equally common assumption is that the mindset of the ultra wealthy is in some way different to the average investor.

But according to those with whom the rich entrust their financial decisions the reality is that mega investors are generally vastly more down to earth, conservative and ‘mainstream’ regarding the spread and management of their invested dollars than the romanticised perception.


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Resoundingly, private bankers and financial planners agree that the bulk of their high net worth clients have worked hard to make their money so risk minimisation is paramount.

Doug Webber, associate director of Macquarie Private Wealth Management says, from time to time clients do look for alternative opportunities such as shares in unlisted companies but with their core wealth they’re actually more conservative than the rest of us. “Most people with large amounts of money don’t do things terribly differently to anyone else. They just attach more naughts to their transactions,” he says.

Contrary to the perception in the marketplace that the wealthy are open to risk taking, Pamela Salaverry, head of business stgelopment for NAB Private Wealth says many are quite risk averse. “Some could have been a lot wealthier had they diversified into the sharemarket. But no, they just stuck with property and cash,” she declares.

Financial planner, Jason Ennels, director, Open Financial Services, agrees. He says that the primary focus of those who have money is to maintain it as opposed to wanting to double or triple it.

The opposite could be said of someone with less money, he says. “They tend to be more aggressive investors because they’re more interested in the upside than preserving the status quo.”

How they acquired their wealth has a large bearing on how they invest it, says Ennels, pointing out that possessing money does not automatically equal a sophisticated investor.

He explains that everyone has their own biases and as a general rule if someone has made money in a certain way they tend to have a bias to that particular method.

“For instance, if someone has received a massive payout from a stgeloper for a block of land in Sunshine (Melbourne’s western suburbs) he will tend to look for a similar opportunity with land further out to try to replicate what’s happened.”

Mark Fitzgerald, executive financial planner at Westpac breaks down the investing strategies of high net worth clients into three broad categories.

a) Active investments.

b) Passive investments.

c) Self-interest investments.

The first step (active investing) entails clients investing in their own businesses. Further down the track they start to look at passive investments such as shares and property. Fitzgerald says the third category, self-interest investments, applies to “true high net worth clients who have money above and beyond what they can deploy in their businesses and passive investment”.

“They’re often willing to accept a lower investment return because they derive other satisfaction from it,” he says, noting that hobbies such as horse breeding, horse racing, art, prestige cars, wine often fall into this category.

Webber supports Fitzgerald’s comment saying that while the super-rich continue to buy football clubs it’s more about passion than the desire to capitalise on the purchase.

Income protection as opposed to investment outcome or tax minimisation is the main priority.

“They’re more concerned about losing all their wealth than part of it through tax,” declares Fiztgerald.

Debunking the myth that high net worth clients come to the table with inflexible ideas Fitzgerald maintains that one of the strengths of the mega rich is their willingness to listen to advice.

“I think that’s one of the keys to their success,” he says.

Fads come and go says Ennels. Emu farming has had its day, unlisted investments remain a source of interest, art is solid but the big surprise to private bankers and financial planners is the current interest in term deposits.

As Webber explains, people who are cashed up are turning to term deposits to lock in a good rate until the markets calm down and it is time to buy back in.

“We’ve just added our traditional, run of the mill, standard Westpac term deposits to our platform because there’s been such a demand for it,” exclaims Fitzgerald.

“People are moving from a focus of wealth creation to capital preservation. You can feel the shift. They’re standing back and taking a breath and getting ready for the next growth phase.”