Danny J. Young of Adel, GA has been working as a financial services specialist for the last 40 years. Mr. Young, currently president and CEO of Independent Retirement Professionals, has trained and mentored countless other professionals. In the following article, Danny J. Young discusses managing the finances of wealthy individuals, why it can be complex, and why high-net-worth individuals are interested in sustainability.

While wealth management firms and independent financial advisors must frequently adjust their services to meet current market trends, it looks like 2023 may pose a particularly tough set of challenges for those looking to protect the investments of their high-net-worth clientele.

Danny J. Young of Adel, GA says that most markets have failed to fully recover from the effects of the COVID-19 pandemic, and 2023 is unfortunately looking particularly volatile as shares continue to fall worldwide. Wealth managers must fully embrace digital trends while meeting demands for greater sustainability if they wish to satisfy their clients.
Embracing all of these changes at once makes for a rather complex challenge. To reach a solution, advisors must first gain a better understanding of the problem.

Current Market Trends Look Unfavorable

Danny J. Young of Adel, GA reports that, as global market shares fell during the pandemic, many new investors basically lost money suddenly overnight. Many of those prospective clients may never return to trading again. Those who remain still feel understandably pessimistic about their financial futures.

Among the many complex struggles facing high-net-worth investors, some notable ones include:

• Lack of current participation in the commission-free trading market
• Significant losses among cryptocurrency traders
• Dwindling support for businesses not pursuing environmental sustainability
• Transfer of wealth from older generations to younger heirs
• New regulations in several international markets
• Retirement concerns among older high-net-worth individuals

Further exacerbating the complexities of wealth management for these individuals is the fact that many who lost money during the pandemic attempted to save themselves by dropping their advisors and going it alone. By the time they return to seeking for help in recouping their losses, the state of their investments is almost too precarious to salvage.

Wealth Management Is Going Digital

Danny J. Young says that it may strike some as odd that demand for digital literacy among financial advisors remains such a prominent talking point, particularly after digital finances in the form of cryptocurrency crashed and burned in 2022. However, these two issues are actually unrelated. The demand for digital wealth management is instead a holdover effect of the pandemic.

Investors who continued trading during the COVID outbreak found themselves, much like the rest of the world, unable to meet with their advisors in person. This required wealth management firms to lean heavily on tools for sharing data analytics with their clients online.

As these digital tools became the only viable form of interaction between wealth management firms and their high-net-worth investors, many of those investors naturally grew accustomed to this new norm. Even as the pandemic began to subside, clients remained unwilling to leave this newfound method of operating, due to the high level of ease and accessibility.

Meanwhile, Danny J. Young of Adel, GA explains that those affected by the crypto bubble stand convinced that digital losses can be remedied through digital solutions. Investors impacted by bubble bursts, such as Robinhood Markets’ nearly $400 million loss during the crypto crash, want advisors with keen enough digital acumen to understand the root causes thoroughly enough to get them out of hot water.

High-Net-Worth Investors Demand Sustainability

As if the above slew of concerns didn’t make things challenging enough, the handover of
intergenerational wealth means growing numbers of younger investors with a stubborn interest in supporting environmental sustainability. While admirable, this limits their investment opportunities to largely exclude companies without green initiatives.

Curiously, Danny J. Young of Adel, GA notes that the number of investors dedicated to sustainable solutions seemingly rose in conjunction with their overall net worth. A survey conducted in 2020 showed that roughly 27% of investors worth $1 million or more were dedicated to environmental sustainability, with this percentage rising to 40% when looking at those worth at least $30 million.

On average, environmentally focused investors planned on putting about 46% of their investments toward companies with sustainability policies in place. Apart from environmental sustainability, these high-net-worth individuals also showed interest in companies with policies concerning social or corporate governance.

The writing on the wall is clear. Wealth management firms who thought their industry to be isolated from the global push for progressive policies were profoundly mistaken. Financial advisors who wish to maintain their more affluent clientele in 2023 will need to familiarize themselves with the companies that pursue these policies, rather than risk losing investors.

Conclusion

The current challenges facing wealth management firms who wish to retain their high-net-worth investors amid current market shifts are multifaceted, but a complex situation is not necessarily an insurmountable one. Advisors must simply familiarize themselves with shifting global trends and progressive policies if they wish to appease the new order of affluent investors.

Danny Young is registered with and securities are offered through Kovack Securities, Inc. Member FINRA/SIPC. 6451 North Federal Hwy, Suite 1201, Ft. Lauderdale, FL 33308, (954) 782-4771 Investment Advisory services are offered through Kovack Advisors, Inc. Independent Retirement Professionals, Inc. is not affiliated with Kovack Securities, Inc. or Kovack Advisors, Inc. The information in this material is not intended as tax or legal advice. Please consult legal or tax advisors for specific information regarding your individual situation.