High net worth individuals (HNWI) in the UK see changes to taxation laws and regulation as the biggest threat to their investment portfolios over the long term, research from Argenta Private Capital Limited (APCL) has found.

Almost half (45.5 per cent) of HNWIs cited tax changes as one of the three biggest long-term threats to portfolios.

This was closely followed by economic downturn, cited by 45 per cent of respondents, while geopolitical uncertainty (39.5 per cent), effective succession planning (38.5 per cent), and climate change (32.5 per cent) also prompted concerns.

Looking at HNWIs’ wealth sources, just 11 per cent cited inheritance as their main source of wealth.

Investments were found to be the primary wealth source among HNWIs, cited by 35 per cent of respondents, followed by entrepreneurship/business ownership (30.5 per cent), and executive compensation/salary (19.5 per cent).

Wealth preservation emerged as the most important factor influencing investment decisions, with 37 per cent of HNWIs choosing it among their top three factors.

Capital growth/appreciation was the second most commonly cited factor (36 per cent), followed by risk diversification (35.5 per cent), ESG consideration (33 per cent), and wealth transfer (32.5 per cent).

APCL said that the rise of digital investment platforms, finfluencers, and artificial intelligence adoption was empowering individual investors to manage their finances, raising speculation about the role of traditional investment managers.

However, its research showed that 65 per cent of HNWIs still use a financial adviser, with a close working relationship coming in as the second most valued service behind regular access to investment ideas and research.

“In a world that is dominated by the digital sphere, it is interesting, and perhaps comforting, to see that a face-to-face relationship is still valued highly by investors,” the firm stated.

“The third most valued aspect of the wealth management relationship is access to a seamless user interface, which is a clear sign that investors are embracing the more practical elements of the digital world while retaining the personal relationships that evolving technology cannot replicate.”

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