A majority of Canadian high net worth investors agree this is a time of great opportunity in the markets, yet over half are still unsure of where to place their money and 64% are re-evaluating their portfolio mix.

That’s according to a study released Thursday by BlackRock, Inc. (NYSE: BLK), which was conducted by its iShares exchange traded fund business in Canada.

Despite the wealth of this group, the survey indicated that the recession and market decline made a significant impact on people’s investment style: 73% said it changed their style of investing, with most of them becoming more cautious.

According to the survey, 67% of HNW investors are very confident in Canadian investments and markets, and far less confident in investing in the United States. While 50% felt that emerging markets represented a good opportunity only 39% felt the same about the U.S.

Nearly 80% of HNW investors placed a great deal of importance on learning about new financial products and solutions from their advisors.

The survey also found that 47%)of HNW investors who own mutual funds believed that their mutual funds did not charge management fees. Nine per cent were unsure.

“High-net-worth investors are seen as trendsetters yet we found they have as many questions and concerns about their financial situation and investment trends as anyone else,” said Heather Pelant, Managing Director, head of iShares at BlackRock Asset Management Canada Limited.

“Given their desire for caution, it’s more important than ever that these investors are aware of the latest financial products and solutions that can help them achieve investment goals. Advisors have an opportunity to elevate the conversation and provide value-added service by carefully explaining different and/or other sound investment vehicles, such as ETFs,” Pelant said.

HNW knowledge and understanding of ETFs

”We’re starting to see a shift where investors are becoming increasingly aware of ETFs as a viable investment tool. Those most familiar with ETFs feel strongly about their benefits. However, it seems the level of understanding of ETFs as a sound investment with solid returns needs to get better,” said Heather Pelant.

The survey found that while 60% of HNW investors had some level of familiarity with ETFs, roughly one-quarter of respondents were unable to answer whether or not ETFs are a good investment.

Among those familiar with ETFs, the majority indicated they have a favourable view of them relative to mutual funds in a number of areas, including transparency, rate of return, preservation of capital and lower management fees.

However, only 27% of HNW investors with an advisor or broker indicate that their advisor has recommended an ETF and only 12% of all HNW investors have ETFs in their portfolio.

Generational gap in investment style

Like most retail investors, the recession and market decline made HNW investors more cautious in their investment style, especially those between the ages of 35 and 65. However, the survey found that investors 35 and under were far less likely to say they have become more cautious and roughly one-third stated they had become more aggressive. Those at retirement age were most likely to say it changed little in how they invest.

The survey also found that 60% of respondents under the age of 35 agreed that advisors provide no better information or advice than can be found on the internet. Among older HNW investors that drops to less than a third.

Likewise a majority of those under age 35 agreed that it was not worth paying advisors or brokers for fees or transactions, whereas among older investors only a minority agreed. Investors under the age of 50 were also more likely to have a self-directed brokerage account, with a quarter of those under 35 saying they use only an online account.

“We’re seeing a direct correlation between younger investors and the likelihood of making independent investment decisions and adopting new ways of investing, whereas the older demographic tend to rely on the advice of others and keep to what they know,” added Pelant.

The HNW investors study was based on an online survey conducted between March 16 and March 29 by The Gandalf Group of 500 Canadians across the country who qualified as high-net-worth investors. Canadians who qualified as high-net-worth investors were those who said they owned at least $500,000 in investments not including their homes or workplace or employer-sponsored pensions.

Headquartered in New York City, BlackRock provides a investment management, risk management and advisory services for institutional and retail clients worldwide.

IE