Wealthy Investors Are Upbeat About Portfolio Prospects

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Britain’s wealthiest investors are optimistic about how their portfolios will perform in 2013 after several years of poor trading.

However, they are careful over losing their money and only a fifth are keen  to take risks.

Around half of their investable wealth is held in property and cash.

Those are the findings from an annual wealth survey conducted by leading international firm Ledbury Research.

“With the beginning to recover, we’ve found that investment optimism amongst the UK’s high net worth FTSE100 individuals is also improving,” said a spokesman.

“We also discovered that the level of ‘risky’ investments held by wealthy individuals in their portfolios hasn’t changed for the second year and remains at 22%.”

Investment optimism

She added: “We found that in 2011, just 22% of the wealthiest investors had an optimistic outlook on the recovery of the investment market and there is a marked increase this year to 44% of the same group. They consider themselves to be optimistic about making investments in the coming year.

“It’s this optimism which might be the green shoots of recovery we have been looking for but wealth managers need to better understand how to protect their clients from downturns.

“In addition, wealth managers particularly need to understand their clients’ views on risk.”

Wealth managers generally define risk as an investment which has deviated from its expected outcome.

But Ledbury have found that wealthy investors see risk as a short-term issue which is limited to the volatility and potential loss of investments.

The spokesman added: “There’s no doubt that risk is a complicated area and understanding the factors involved is a job for those in the industry rather than for their clients.

Understanding risk

“But clients looking to meet their investment objectives need to better understand what risk is and be more willing to take them.

“By doing so, a wealth manager might just be able to tempt an investor out of hibernation and into making investment decisions which really help boost their portfolio.”

The report also highlights how wealth managers need to help their clients by understanding what their misconceptions are when it comes to risk and investments and then work with the client, rather than against them, in achieving investment objectives.

By doing so, says the report, they will reveal how valuable their knowledge and expertise of the investment markets really is to their client.

The firm’s report is important because wealthy have a disproportionate amount of spending power and massive consumer influence and their confidence reflects the wider economy.