Cambridge Survey: Wealthy Families Report What's on Their Minds

Missed investment opportunities and a desire for information about investments top the list

High-net-worth individuals and families share many portfolio concerns with not-for-profit organizations, but differences between the two groups exist as well, according to a Monday, May 17 statement by Cambridge Associates, announcing the results of a recent client survey.

For the survey, Cambridge contacted more than 400 clients, including family offices and private clients (individuals and families). The median asset size of the private client/family office segment was $150 million, and the mean was $419 million. Of the private clients, 75% are based in the U.S., while the rest are in other jurisdictions.

Half the respondents in both the not-for-profit group and the private client/family office group said they were concerned about missing investment opportunities, and about 42% in each group said they worried about potential overexposure to specific risks, including leverage and currency fluctuations.

However, whereas 43% of not-for-profit respondents expressed concern about increased portfolio complexity, only 18% of affluent families did so. The time it takes to oversee portfolios was also a more pressing issue for the not-for-profits (35%) than for affluent families (23%).

Forty percent of families and 36% of institutions said they were concerned about the risk of significant issues with portfolio managers. In a separate email message, Lindsey Brace Martinez, the firm's director of global client service and relations, commented: "Given the timing of the survey in September of 2009, it's not surprising that clients would be interested in being on the lookout for issues with managers in their portfolios, and manager blow-ups in particular. Madoff, for instance, was front page news at the time. Private clients want assurance that their advisors have done rigorous and comprehensive due diligence with their manager lineup--this is an essential component of risk management."

A desire for lots more information was also on the minds of affluent families. Asked what they wanted in the aftermath of the financial crisis, 55% said they wanted more risk exposure analytics across their portfolios, 41% wanted more topical webinars and conference calls and 35% wanted more client forums and educational workshops.

Three-quarters of private clients in the survey said they were at least somewhat satisfied with their investment performance during 2009. "Cambridge Associates' private clients had a high level of satisfaction, particularly during last year when the market was in turmoil, and especially compared with satisfaction with other organizations and financial institutions," Martinez said in the email.

Michael S. Fischer (msf7@columbia.edu) is a New York-based financial writer and editor and a frequent contributor to Wealth Manager.

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