High-Net Worth Investors Not Keen on Index Funds

[FinanceDude]

Quote:

Originally Posted by Olav23 I think this is only part of the case. I think it is also very much about priorities. I assume UHNW individuals are very busy people. Do they need to concern themselves with asset allocation, or is it a better utilization of their time to focus on their core business/philanthropy/outside interests?

It is most likely the second part of the last sentence above.

Quote:

I'd say they could read one of the Bogle guides and be 95% of the way there.

UHNW is usually viewed as folks above $5 million in investable assets. Folks with that kind of money generally are not DIY, and will not be anytime soon...... they're not going to read a book and start moving $5 million around..........

[igsoy]

Quote:

Originally Posted by travelover I wonder how HNW/UHNW are defined. Heck, some of us are probably HNWs and don't even know it! :confused:

Ranks of high net worth people rises 8.3%*worldwide - Jun. 27, 2007


This article cites a report for 2006. The categories are a bit unclear. It implies that HNWs have over 1M in investable assets(obviously not counting home equity) and there are 2.9 million people in that category in the US, 9.5 million worldwide. It definitely says that UltraHNW is investable assets over 30 million dollars, and counts 95k of them but it doesn't say if that's US or worldwide.

[MasterBlaster]

Thats the wikipedia definition of HNW ($1MM) and UHNW($30MM)

High net worth individual - Wikipedia, the free encyclopedia

my personal definition of a high net worth individual is considerably higher. I would define a high net worth individual as someone who has invested assets that could generate income at the top 10 percent of all income or greater. An Ultra-High net worth indivual is someone whos assets could generate income in the top 1 percent of all incomes.

[igsoy]

Quote:

Originally Posted by MasterBlaster Thats the wikipedia definition of HNW ($1MM) and UHNW($30MM)... ...I would define a high net worth individual as someone who has invested assets that could generate income at the top 10 percent of all income or greater. An Ultra-High net worth indivual is someone whos assets could generate income in the top 1 percent of all incomes.

I searched for these income figures and came up with figures for 2005:
top 10%= income of 100,000 and above. Achieving this yearly income (at 4-5% SWR) would require having assets of, say 2 to 2.5 million to be called HNW.

top 1%= income of 348,000 and above. Achieving this yearly income (at 4-5% SWR) would require having assets of 6.96 to 8.7 million to be called UHNW

You'd have to inflate these figures a little to relate it to 2006.

[Olav23]

I found this in another recent article on the growth of the ultra-rich:

High-net worth individuals are those with $1m (£500,000) to invest in financial assets excluding first homes. Ultra high-net worth individuals have $30m at their disposal.

Super-rich get wealthier faster | | Guardian Unlimited Business

[unclemick]

Hmmm:

1. I'm with Bogle - you get what you don't pay for.

2. I don't ask my doctor(HNW) for investment advice.

3. I suffer from the white coat syndrome - so sometimes I ask my doctor what he invests in - it usually gets me laughing so hard it lowers my bp 20 points or so.

heh heh heh - I get itchy if I don't post once in a while. . In a lot of cases - hiring an investment advisor is a lot like joining the country club, having a status luxury car or McMansion - they believe that is what they are supposed to do.

[cute fuzzy bunny]

Quote:

Originally Posted by unclemick 3. I suffer from the white coat syndrome - so sometimes I ask my doctor what he invests in - it usually gets me laughing so hard it lowers my bp 20 points or so.

Thats happened to me a few times too. Last one harumphed when I told him where I was invested... "MUTUAL FUNDS?!? Harumph". Then he told me that most of his money was in b33ver ch33se. No...really.

[audreyh1]

Quote:

Originally Posted by FinanceDude they're not going to read a book and start moving $5 million around..........

Some most definitely will. Taking a look at how much a 1% cut of $5M is and it's easy to get motivated to read a couple of books and study a couple of websites.

Audrey

[saluki9]

Quote:

Originally Posted by audreyh1 Some most definitely will. Taking a look at how much a 1% cut of $5M is and it's easy to get motivated to read a couple of books and study a couple of websites. Audrey

Find me an advisor charging 1% on a $5M relationship and I will show you my new personal hero.

Those accounts solicit much more price competition.

[heyyou]

Wm Bernstein wrote that richer people had much greater opportunities to lose money since the variety of poor investments were broader and more sophisticated.

[FinanceDude]

Quote:

Originally Posted by saluki9 Find me an advisor charging 1% on a $5M relationship and I will show you my new personal hero. Those accounts solicit much more price competition.

Most $5 million accounts are competed on for a 30-50bp a year level........

[FinanceDude]

Quote:

Originally Posted by audreyh1 Some most definitely will. Taking a look at how much a 1% cut of $5M is and it's easy to get motivated to read a couple of books and study a couple of websites. Audrey

Outside of the millionaires on this board, doubtful. Most people on this board won't even CONSIDER DFA unless they could get it for under 10bp +ER with an advisor at their beck and call..............