A new report finds the majority of Australian millionaires do not rely on financial advisers and prefer to leave their wealth in cash.
The 2019 State of Wealth Report, which is based on research conducted by Crestone Wealth Management and CoreData, found most millionaires are unsophisticated investors and favour their own advice when it comes to investing.
The report found that 20% of individuals did not use any form of financial advice and 50.5% did things themselves and just sought confirmation from either professionals or other information sources.
More than half of respondents can be classified as coach seekers, they are seeking validation on the decisions they are making but would seek professional help to make those decisions"
Only 20.5% of respondents relied on a trusted professional to help them deal with their investments.
Simon Hoyle, head of market insight at Coredata, said most of these individuals fell into a category they called coach seekers, those that sought validation.
"More than half of respondents can be classified as coach seekers, they are seeking validation on the decisions they are making but would seek professional help to make those decisions," he said.
Hoyle added that the single biggest circumstance that would trigger individuals to use a financial adviser was if they found one they could trust.
"The relativity low uptake of financial advisers in this cohort is a surprise but the barriers to taking up advice are around trust. The issue of trust flows through to how individuals seek advice or whether they perceive value in the services they provide," he said.
Of the 1000 high-net-worth individuals and ultra-high-net-worth individuals surveyed, a staggering 81% are sitting on cash in the form of savings accounts and term deposits. More than half (56%) invest in Australian equities, followed by direct residential property (42%).
Head of strategy and development at Crestone Wealth Management, Clark Morgan, said most of the respondents had very concentrated investments and this exposed them to risk.
"These individuals invest in three asset classes; Australian equity, cash and property, all heavily correlated, very concentrated and Australian domestic equities is a very small subset of global equities where you can get that diversification," he said.
The report highlighted a level of "inertia or status-quo bias" among the wealthy; many claim they are comfortable with the composition of their portfolio as it is despite the risks associated with the lack of diversification.