Targeting high-net-worth validators

Martin Morris (Centric) provides insights into the growth of high-net-worth investors, including what drives their behaviour towards investing. He shares his thoughts on how advisers should approach this cohort of sophisticated investors

The high-net-worth (HNW) investor landscape in Australia is evolving rapidly, with 2024 research from Investment Trends showing this cohort now controlling over $3.3 trillion in investable assets.

For advisers and advice businesses wanting to tap into this growing investor segment, Martin Morris — Head of Centric — says it’s critical to understand that the expectations of HNW investors — both in client engagement and investing — are very different from mum and dad retail clients.

By Jayson Forrest

Speaking on the topic of ‘High-net-worth clients and managed accounts’ at the IMAP Advice in Action 2025 conference, Martin says it’s essential that advisers understand what it is HNW investors want from the advice process. He believes a good value proposition engages with clients, employs the right type of technology (including AI avatars), and provides investors with access to the right type of investments.

“HNW investors are very different to retail clients, including their approach to client engagement and investing. HNW investors want a very different experience to retail clients,” says Martin. “They want information and to be kept informed about what’s happening, and they are increasingly looking to invest in illiquid assets, like alternatives and private equity. HNW clients definitely approach investing very differently to retail investors.”

He believes that with strong growth in the HNW space, it’s an area of advice that advisers should consider targeting. As an example, he points to the growth in family offices in Australia, which has increased by 150 per cent over the past decade, according to research from KPMG.

An important factor to consider about HNW clients is their approach to investing and their expectations around working with advice professionals.

Citing current research from Investment Trends, Martin says HNW investors in Australia can be divided into three segments: the delegator (5 per cent — down from 25 per cent in 2023), the validator (58 per cent — up from 45 per cent in 2023), and the self-directed (35 per cent — up from 30 per cent in 2023). According to the research, from 2018 to 2024, the percentage of validators rose from 31 per cent to 58 per cent, representing the largest and fastest growing segment of HNW investors.

Typically, HNW validators seek financial advice as a second opinion and as part of an overall partnership discussion. They’re not interested in delegating or outsourcing investment decisions to an adviser on an ongoing basis, but instead, HNW validators look to work collaboratively with advice professionals when needed, in order to receive timely and tailored advice that meets their needs.

“These results suggest that if your website invites HNW clients to come to your practice, where  your team will do everything for them, then you’re not talking their language,” says Martin. “If the way in which you are using digital engagement isn’t talking to them, then you’re not talking their language. It’s important to understand that 58 per cent of HNW investors are validators, which means they don’t want to delegate the investment decision-making process to advisers.

“The percentage of validators is significant and they’re increasing. So, if you’re not giving them access to information, then someone else will. However, if you can use artificial intelligence (AI) and technology to engage with these clients about their investments, then you’re likely to have a great opportunity to work with HNW validator investors.”

For advisers wanting to target and service the growing segment of HNW validator investors, Martin believes there are opportunities across the following four areas.

1. Holistic wealth structuring

“HNW validator investors don’t want advisers to do portfolio management. They’ve already got their portfolio, and they’ve made their money,” says Martin. “What they really want is estate planning, and inter-generational wealth transfer conversations and planning. That requires advisers to bring the whole family unit together to be part of the conversation.”

In addition, HNW clients also require help with tax optimisation across entities (such as trusts, SMSFs, and companies), philanthropic structures, and succession frameworks and governance models.

2. Evolving use of platform technology

Originally, platforms were designed specifically for retail clients, while private wealth firms preferred to engage in more bespoke work with their HNW clients. However, Martin says this has now changed, with platforms trying to break into the HNW investor space by expanding investment options and improving technology to target the needs of HNW investors.

This includes providing custom reporting tools across multiple entities, integrating off-platform and illiquid assets into single-view dashboards, and providing private asset hubs that allow investment, administration, and reporting.

3. Adviser-led investment governance

Adviser-led investment governance is about outsourcing these functions. This includes: in-house investment committees; forming strategic partnerships with research houses; developing client-specific Investment Policy Statements (IPS); and overlaying management via discretionary authority (MDA operators).

4. Rise of the Virtual Family Office

A virtual family office (VFO) provides wealth management services to HNW families, but without the need for a physical office space or dedicated in-house staff. Instead, a VFO leverages a network of independent professionals, like financial advisers and tax professionals, who collaborate remotely to offer comprehensive advice and support, similar to a traditional family office but with greater flexibility and cost-effectiveness.

According to Martin, the rise of the VFO means smaller HNW families can now emulate traditional multi-family office models. Typically, these HNW families need help with:
* Outsourcing investment, tax, legal, and administration functions;
* Using digital collaboration tools and cloud-based dashboards; and
* Seeking advice practices that can offer ‘single point-of-contact’ co-ordination.

“With the growth in the HNW investor market, there is an opportunity for advisers to tap into this space. The VFO comprises of HNW investors with $5-10 million to invest. These clients have increased demand for MDA and IMA services, as well as bespoke reporting packages, and integrated estate and risk management structures,” says Martin.

When servicing HNW clients, Martin says advisers need to consider what type of investment structure best suits this cohort of investors. While SMAs provide significant efficiencies, this vehicle really only deals with liquid assets. He believes the biggest challenge facing SMAs is their inability to deal with illiquid assets. 

“The higher net-worth the client you’ve got, the larger their portfolio is, the more likely it is that they’re going to want something that is bespoke to their needs,” he says. “As opportunities in publicly listed markets continue to decline, they are increasingly wanting access to illiquid investments, like private equity and alternative assets.

“So, advisers need to consider if an MDA is the right solution for their HNW clients. Or should they consider an IMA, because they are dealing with family offices and need a structure that can handle more wholesale investments? The choice of structure really depends on the client and their individual needs.”

Considering that HNW validators typically seek financial advice as a second opinion and are not interested in delegating or outsourcing investment decisions to an adviser on an ongoing basis, Martin acknowledges that advising to the HNW sector is very specific. So, how do advisers go about tapping into this space, and how do they use managed accounts in a way that resonates with these investors?

“It’s a great question,” says Martin. “At Centric, we have developed an investment solution for sophisticated HNW validator investors and family offices, which addresses the core needs of these investors.”

Centric’s investment solution comprises five areas:

1. Chief Investment Officer (CIO) services

Centric’s CIO services include a fully outsourced CIO, specialist portfolio management, and an
independent investment committee.

“The CIO service offers IMA solutions and where possible, is tailored into our MDA for scaled efficiency. As these CIO services are outsourced, Centric simply does the strategy component of the portfolio for the investment committee,” says Martin.

2. Specialist fund development

“At Centric, we realised that if we’re trying to create scale and opportunities for HNW investors, then offering them standard managed funds is not appropriate. So, we’ve created responsible entity (RE) capabilities, which allows us to look at investments that aren’t widely available in Australia and are attractive at a scaled level,” says Martin.

By doing so, Centric is able to offer clients an MDA solution with access to offshore illiquid investments. It also enables Centric to put a wrapper around these investments, which it manages.

“That allows us to have relationships with the likes of Tiger Global Management and Grosvenor Capital Management, which provides us with access to sophisticated offshore investment opportunities, including illiquid assets, that are not readily available in Australia for our HNW clients and at the right price.”

3. Sophisticated investor solution

Although still early days, Centric is looking to capitalise on the growth of the virtual family office by offering its CIO services and specialist funds to this sector, as well as wholesale advice, estate planning, and MDA platform functionality.

4. Auxiliary solutions

With Centric sitting under the Findex umbrella — one of the largest, privately-owned providers of integrated financial advisory and accounting services in Australia and New Zealand — Centric’s HNW clients are able to enjoy a comprehensive service offering, by accessing a range of auxiliary services provided by the wealth management arm of the business. This includes: tax, audit, and advisory services; as well as SMSF administration; lending and finance services.

5. Inter-generational wealth advice

Martin adds that working with family offices has provided Centric with the opportunity to discuss inter-generational wealth transfer with these clients. By maintaining a consistent investment philosophy and uniform approach to building portfolios, Centric has been able to tailor portfolios for each generation of a client’s family. 

“As part of inter-generational planning, we’re also able to assist with tax, insurance, estate planning, SMSF administration and retail advice, for these different generations.”

Martin believes an important consideration for any adviser wanting to work with HNW validators is  to provide them with an investment policy statement (IPS). Different to a Statement of Advice (SOA), an IPS is a key investment governance document that provides a blueprint for an investment management program. Essentially, an IPS is an investment roadmap; it sets the ground rules for investing and outlines how investment decisions will be made and what steps must be taken to ensure good governance. An IPS is clear and functional, and does not need to be overly complicated or legalistic. 

A well designed IPS has:

• Clear objectives and strategy: The IPS articulates the investor’s financial goals, risk tolerance, time horizon, and any specific preferences.
• Defined responsibilities: The IPS clearly assigns roles and responsibilities to all parties involved in the investment process.
• A framework for decision-making: The IPS provides a structured approach to investment decisions, which reduces investment risks. 
• Governance and accountability: The IPS provides a clear framework for how funds are managed and accounted for, promoting transparency and accountability. 
• Performance evaluation: The IPS outlines metrics and processes for monitoring and evaluating the portfolio’s performance against predetermined benchmarks. 

According to Martin, an IPS will talk directly to your HNW validator client. Essentially, the IPS sets the framework of the relationship between the adviser and client.

“Remember, the businesses that are most successful in delivering managed account strategies are the ones that actually understand their clients and their investment philosophy — and this is absolutely essential for HNW validator clients. By doing this, businesses will be better placed to tap into this growing sector of the market, while transitioning HNW clients into managed accounts.”

Martin Morris is Head of Centric.

He spoke on the topic of ‘High-net-worth clients and managed accounts’ at the IMAP Advice in Action 2025 conference.