London, September 20, 2018 – OppenheimerFunds, a leading global asset manager, today announced the launch of "The Generations Project U.K.," a new research study that surveys the different investing behaviours, goals and attitudes across generations within high-net-worth (HNW) families, including their relationships with their advisers.
Art Steinmetz, OppenheimerFunds Chairman & CEO, commented, “As one of the first global investment managers, we continue to underscore the importance of global thinking and diversification for our clients and look forward to sharing our research insights with a new segment of investors and advisers in the U.K. market.”
“The report makes clear the risks of home market bias and lack of asset class diversification, as investors who overwhelmingly choose domestic equities could miss out on the benefits of an increasingly global economy and innovations driving growth throughout the developed and developing world,” said John McDonough, OppenheimerFunds Head of Distribution and Marketing.
In anticipation of the largest wealth transfer in U.K. history – an estimated 66% increase to £115 billion by 2027, according to the Centre for Economics and Business Research – investors are poised to rewrite the rules of wealth advisory. “The Generations Project U.K.” includes the opinions of 900 U.K. HNW investors and advisers across the younger and older Millennial, Generation X, Baby Boomer and Silent Generations.
“With rising generations of heirs continuing to become more active in the management of their family wealth, changing expectations and preferences are having a profound impact on the ability of advisers to maintain existing relationships and build new ones,” stated Doug Stewart, Head of EMEA for OppenheimerFunds.
The study indicates a number of potential areas of opportunity for advisers to better engage with their clients’ families across generations. For example, while a vast majority (88%) of HNW advisers typically teach investment concepts to their primary client, only 54% do the same with their primary clients’ children.
Disconnects in the adviser/client relationship were also highlighted by a stark misalignment in expectations between what HNW investors seek from their advisers and what advisers think clients want.
While HNW Millennial investors rank good investment performance as the most critical aspect of their adviser relationship, advisers believe HNW Millennial clients primarily seek an adviser who has a clear understanding of their financial goals, with performance ranking eighth among advisers, along with fees and commissions.
The research also looked at the investing preferences of U.K. HNW investors, and found a lack of portfolio diversification across markets and asset classes, led by evidence of a strong home market bias with U.K. domestic stocks.
According to the study, 88% of HNW investors own U.K. stocks, while only 62% have international stocks in their portfolios. Ownership of European stocks (58%), emerging markets stocks (44%) and U.K. bonds (38%) follow a similar pattern.
In addition, the research found:
- A lack of communication between investors and their families: Only 54% of investors surveyed currently have financial discussions with their spouse or partner, and 30% have never had these conversations at all. Nearly a fifth (17%) are not currently discussing their finances with anyone.
- Sustainable investing: It sounds good, but younger Millennial investors aren’t buying. While 39% of younger Millennial investors have expressed interest in ESG, only 14% who are interested in the category have actually invested in it. Older investors outpace youngers ones with respect to holding sustainable investments.
- Too few advisers engaged in next gen financial education: With just 26% of Millennials, 23% of Gen X and 21% of Baby Boomer advisers currently providing financial education training to their clients, there is a significant opportunity for advisers to step in and cultivate the next generation of HNW family members through education.
- Millennial advisers offer less services: Young advisers are not yet wise advisers in terms of client service, with Millennials trailing their older adviser peers in offering solutions tailored to different generations (just 61%), compared to 77% of Baby Boomer and 70% of Gen X advisers. Millennial advisers also rank last in providing inheritance advice to clients for both giving (73%) and receiving (68%), compared to Gen X (83%/85%) and Baby Boomers (85%/89%).
“This study should be a clarion call for advisers to better communicate and engage with different family members across generations and hopefully empower younger investors to expect more from their adviser relationship going forward,” said Stewart. “By transitioning from one-to-one advising to a whole family model, advisers are better positioned to help spouses and younger family members prepare for the responsibilities of wealth while establishing a stronger practice for themselves going forward.”
This is the third annual high-net-worth study conducted by OppenheimerFunds, which commissioned CoreData Research LLC to survey wealthy U.S. and U.K. investors and advisers who primarily serve high-net-worth clients to better understand investment behaviours and attitudes across all generations, the role of family dynamics and how advisers engage investors. Conducted online from December 2017 through January 2018, the study included nearly 2,000 investors and advisers. The minimum net investable assets for investors to qualify for the study was $500,000 (£250,000) for Millennial aged investors and $1 million (£500,000) for all other investors. Adviser qualifications included $100 million in assets under management in the U.S and £25 million for the U.K. study with the majority of their book of business comprised of high-net-worth clients.
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OppenheimerFunds, Inc., a leader in global asset management, is dedicated to providing solutions for its partners and end investors. OppenheimerFunds, including its subsidiaries, manages more than $248 billion in assets for over 13 million shareholder accounts, including sub-accounts, as of August 31, 2018.
Founded in 1959, OppenheimerFunds is an asset manager with a history of providing innovative strategies to its investors. The firm’s 16 investment management teams specialize in equity, fixed income, alternative, multi-asset, and factor and revenue-weighted ETF strategies, including ESG, as a signatory of the UN PRI. OppenheimerFunds and its subsidiaries offer a broad array of products and services to clients, who range from pensions and endowments to financial advisors and individual investors. OppenheimerFunds and certain of its subsidiaries provide advisory services to the Oppenheimer family of funds, and OFI Global Asset Management offers solutions to institutions. The firm is also active through its Philanthropy & Community initiative: 10,000 Kids by 2020, reaching children with introductions to math literacy programs.