Hispanic-American Investment Up In Real Estate & Bank Deposits.

Almost half of wealthy Hispanic-Americans increased their investments in real estate (42%)and added to their cash holdings (43%) last year, according to the2003 World Wealth Report just published by Cap Gemini Ernst & Young and Merrill Lynch.

The benchmark report also found almost a third of high net worth Hispanic-Americans increased their holdings in stocks and mutual funds despite volatile markets.

High net worth individuals (HNWIs) are people with financial assets of over US$1million, excluding real estate.

“For wealthy Hispanic-American investors, growing wealth and saving for retirement and their family are key financial goals,” said James Gorman, president of Merrill Lynch’s Global Private Client group.

“However, only a third (33%) of Hispanic-American high net worth individuals have a financial plan, and 41% do not have an estate plan,” said Mr. Gorman. “However, two thirds (67%) do use a financial advisor, according to the World Wealth Report.”

In referencing the World Wealth Report, James Greene, vice president at Cap Gemini Ernst & Young and head of its North American financial services practice, said: “We found the likelihood for all high net worth individuals around the world to make an investment related decision without consulting professionals declined to 45% of those surveyed in 2002 from 55% in 2000.

“However, the change in demand for increased guidance was not indicative of a return to the pre-1990s ‘manage it for me’ approach. Rather, HNWIs now look for advisors who take a collaborative counsel approach characterized by transparency, reliability, and high service levels. HNWIs without a financial plan were, in general, more dissatisfied with services they received, and demonstrated disloyalty through a higher tendency to switch providers.

Mr. Greene added: “As wealthy Hispanic-Americans’ financial needs grow in complexity they expect their providers to comprehensively address a wide spectrum of wealth management services. They are increasingly looking for providers who offer comprehensive financial planning and advice across financial products.

“Our research indicates that in general up to 85% of HNWI investors demand comprehensive financial planning and advisory capabilities from their providers, a significant increase from previous years,” he said today.

A separate Hispanic Affluent Study, undertaken in April-May 2003 by Ipsos and Merrill Lynch, found the financial priority of 89% of Hispanic-Americans was preserving the value of their capital, compared to 97% reported for the general population. Some 85% also mentioned growing wealth as a key financial priority.

Mario Paredes, director of Hispanic business at Merrill Lynch’s multicultural and diversified business development group, said this Merrill Lynch IPSOS study also found: “The financial areas in which Hispanic-American investors report the highest level of knowledge are retirement planning (53%), stocks and bonds (47%) and asset allocation (42%). The areas in which Hispanic-American investors believe they are least knowledgeable are hedge funds (67% not knowledgeable), structured products (60%), and managed future funds (49%).

“Just over a third (36%) of affluent Hispanic-Americans say personal savings and investments will be their primary source of retirement income,” said Mr. Paredes. World Wealth Rises

More broadly, the World Wealth Report noted the number of high net worth individuals worldwide grew 2.1%, just under 200,000 individuals, to 7.3 million people last year. Their combined wealth rose approximately 3.6% to US$27.2 trillion (25.9 trillion euros), despite drops in most of the world’s equity markets, as they diversified their asset allocation.

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