The massive amount of wealth held in cash by investors presents an opportunity for private wealth management firms to start a conversation with clients about longer-term investment and wealth-creation opportunities and aspirations, according to Adrian Hondros, executive general manager of Commowealth Bank’s private banking operations.
Hondros, who took part in the Professional Planner/Franklin Templeton Investments forum on private banking, says there is “a tremendous need” for advice and wealth management services, and now is a good time to start engaging with clients.
Research produced by CoreData’s Private Bank Intelligence Unit (PBIU), presented by CoreData founder and principal Andrew Inwood at the forum, revealed that “most people feel unsure, possibly a bit fearful, and are sitting on cash due to a default position – they don’t know what to do”, Hondros said.
“Their long-term needs and goals have not changed,” he says.
“They would have the same dreams and aspirations, but their willingness to perhaps do something about it seems to have stalled. So I just think that’s a tremendous opportunity for us to educate our clients about what they need to do with that money longer-term to meet those goals and aspirations.”
Hondros said the PBIU research on cash holdings “and the likelihood that it will be held by clients and customers for some time to come” was the “most startling” of the research findings.
“The data that Andrew presented around the uncertainty among people in terms of when they might consider moving that cash into other assets, that uncertainty was widespread,” Hondros says.
“It seems there’s not a lot of response going on at the moment from the holders of cash – they’re looking like they’re going to hold that cash for some time yet.
“Rather than waiting for it to be ready to move our approach is, and will continue to be, to engage with our clients and have conversations with them about what it is they;re trying to achieve longer-term for them and their families; and then compare and contrast that with the way they are currently holding their assets. And indeed, if they are holding a large amount of their assets in cash, to have that conversation with them around well, cash isn;t necessarily the best place to have the majority of your assets longer-term, if you want to fulfil these aspirations, and we need to talk about the gradual movement of cash into growth assets – whether that be for capital growth, or the driving of tax-effective yield.
“We need to start that process and it’s best to do that over a period of time.”
To read a full version of the Professional Planner/Franklin Templeton private bank forum, please CLICK HERE.