Cerulli: Almost a Third of High Net Worth Providers Have Increased Fees

Financial planning is the primary planning service of 82.8% of HNW providers, followed by estate planning at 69% and risk management and insurance at 31%. In respect to investment services, the report discloses that asset allocation is offered by all providers, followed by traditional manager search and selection at 89.7%, alternative manager search and selection at 72.4%, risk modeling at 71.4% and internally managed hedge funds or fund of hedge funds at 21.4%.

Chief investment officer outsourcing—the delegation of portfolio management to an outside firm—is most widely used for oversight of endowments and foundations, the report finds. Of the HNW CIO outsourcing firms surveyed, these entities accounted for 40.2% of assets, followed by single family offices at 22.5%, HNW individuals at 13.3%, public defined benefits and private defined benefits at 9.9% and 8.1% respectively, multi-family offices at 2% and “other” at 3.9%.

More than half (56%) of HNW providers are using more 1940-Act mutual fund with hedging strategies than was the case one year ago, the report finds. Of this group, private client groups are the largest users of hedging strategies at 75%, followed by multi-family offices and registered investment advisors at 38%.

In three years, the report discloses, one in five HNW providers (20.3%) plan to use alternative asset allocation strategies, up from 17% today. By contrast, the use of equities is expected to decline over the same period (46.3% currently versus 44.9% in three years) and fixed income assets (30.8% versus 30.1%).