Number of new Australian millionaires hits five-year high

Australia minted 43,500 new millionaires in 2014 because of strong equity and investment property markets, representing the biggest growth of high net worth investors in the past five years as the rich comb for new areas to park their funds, Investment Trends research shows.

The country is home to 443,500 "high net worth" (HNW) investors; those with investable assets of more than $1 million.

This group controls $1.6 trillion in assets, nearly equivalent to the entire retirement savings industry. There are also 580,000 "emerging" high net worth Australians with $500,000 to $1 million in investable assets. 

"If asset values continue to increase, then we can definitely also expect to see the growth in the number of high net worth investors in Australia continue," said Recep Peker, senior analyst at Investment Trends, adding that strong returns from the equities market and property last year helped propel the growth of HNW investors in the market. 

Despite their booming wealth, the research found that only 40 per cent of high net worth individuals sought professional advice last year, down from 44 per cent in 2013, and more than 250,000 of these investors had unmet financial advice needs.

Irene Guiamatsia, an analyst at Investment Trends, said high net worth investors would be prepared to spend an additional $560 million annually on advice, on top of the $1.9 billion they were already paying, providing "a tangible opportunity for the financial advice industry". 

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The research found that ANZ Private Bank took the lead in client satisfaction for private banking last year, edging ahead of NAB Private.

ANZ has been concentrating on more personalised services and access to relevant technical specialists. 

Companies such as Perpetual are also ramping up their efforts to focus on HNW clients.

Perpetual chief executive Geoff Lloyd said the company had about 50 advisers who focused onHNW investors with an average balance of $2.5 million.

Perpetual had the capacity to grow its client base by a further 15 per cent to 20 per cent as demand for advice ramped up, Mr Lloyd said. 

The data also comes as advisers grapple with a series of scandals that have rocked the sector in the past year. These include Commonwealth Financial Planning and Macquarie Private Wealth planners who were embroiled in cases of dodgy advice that cost investors millions of dollars, and, more recently, National Australia Bank sacked 37 financial planners for bad advice.

Despite the negativity, demand for advice remained alive and well across the HNW sector and planners were ramping up their focus on these investors, Investment Trends argued.

"Since 2011, there has been a 66 per cent increase in the proportion of financial planners who are HNW focused," Mr Peker said. 

The largest barrier preventing rich investors from taking up investment advice was the preference for control.

"Advisers need to spin their proposition in a manner which also gives their clients the confidence that they'll be able to maintain some degree of control," he said. 

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