Chubb and Wharton Study Examines Ultra-High-Net-Worth Individuals' Preferences on Financial Advising and Investment Management

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Dec 21, 2021
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New research highlights differences in how financial advisors and their UHNW clients evaluate assets and coordinate risk management activities

PR Newswire

WHITEHOUSE STATION, N.J., Dec. 21, 2021 /PRNewswire/ -- Chubb and The Wharton School of the University of Pennsylvania have released a new research report that examines differences in how wealth managers and ultra-high-net-worth (UHNW) individuals evaluate assets and coordinate risk management activities. The study, which included a survey of 100 UHNW investors, family office members, and key financial decision makers, found that these differences are particularly apparent with tangible assets like property, art collections, and other valuables.

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"Wharton is known for its groundbreaking research in finance and wealth management, and this particular study shows that ultra-high-net-worth asset owners generally think about risk, risk management and investment undertakings differently from most people," said Chris Geczy, the Wharton finance faculty member overseeing the research. "In our sample, most UHNW respondents view their wealth holistically, meaning that they think of multiple factors, such as tangible non-financial assets, operating businesses assets, human capital and liquid financial assets, as representing a more complete picture of their family's total wealth. Understandably, many wealth managers may focus largely or exclusively on the risks and returns of stocks, bonds, private equity and other financial investments, but the research shows that UHNW asset owners want their wealth managers to consider tangible assets to be a part of their investment plans."

Other key insights that emerged from the Wharton survey include:

  • Eighty-seven percent of the ultra-wealthy reported seeing tangible assets as part of their wealth, while only 53% of financial advisors consider these assets in the same way;
  • There's a 37% gap between UHNW investors who believe tangible assets should be included in their balance sheet and wealth advisors who coordinate with an insurance agent or broker to protect those assets;
  • Ninety-five percent of respondents with $50M+ in wealth, and 80% of individuals with $30M+in wealth would prioritize coverage and service over price; and,
  • The number one insurance priority for UHNW individuals is knowing that the insurance carrier has a strong balance sheet (and is financially stable), followed by the ability to handle complex situations.

The research also found that, modeled over a 40-year period, adequate liability insurance and property coverage might improve the risk-adjusted return on assets of total balance sheet portfolios that include a family's business, property, and possessions.

"Ultra-high-net-worth people face constantly changing and complex risks and are looking for guidance from those who understand the complexity of their wealth, such as advisors and insurers, to coordinate all assets and risks," said Fran O'Brien, Division President of Chubb North America Personal Risk Services. "Most wealth managers have an extensive network of professionals, such as accountants and attorneys, to supplement the guidance they provide. As part of that network, advisors should also consider working with insurance agents, brokers, and carriers who specialize in ultra-high-net-worth clients to ensure they are covered more holistically."

Download the Does Wealth Change the Way You Think report and the Out of Left Tail report as well as the Improving the Risk-Adjusted Return of Your Ultra-High-Net-Worth Clients' Portfolios case studies.

About Chubb:

Chubb is the world's largest publicly traded property and casualty insurance company, and the largest commercial insurer in the United States. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London, Paris and other locations, and employs approximately 31,000 people worldwide. Additional information can be found at: chubb.com.

About the Wharton School:

Founded in 1881 as the world's first collegiate business school, the Wharton School of the University of Pennsylvania is shaping the future of business by incubating ideas, driving insights, and creating leaders who change the world. With a faculty of more than 235 renowned professors, Wharton has 5,000 undergraduate, MBA, executive MBA and doctoral students. Each year 13,000 professionals from around the world advance their careers through Wharton Executive Education's individual, company-customized, and online programs. More than 100,000 Wharton alumni form a powerful global network of leaders who transform business every day. For more information, visit www.wharton.upenn.edu.

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SOURCE Chubb

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